Tesla to score Chinese electric car ban over national security as BYD dismisses soft US EV market

When asked whether BYD plans to use its upcoming EV factory in Mexico for exports to the US market, the president of BYD Americas answered that the company is not interested since investment in electric mobility seems to be waning here.

"We’re not planning to come to the U.S. It’s an interesting market, but it’s very complicated if you’re talking about EVs," she confirmed, and added that the factory that BYD is looking to build around Mexico City would predominantly supply the local market.

BYD may have little choice anyway, since President Biden ordered an investigation into the security risks posed by the eventual Chinese EV exports to the US that may be designed to escape tariffs and even earn subsidies like federal tax credits with factories located in Mexico.

Last month, the Alliance for American Manufacturing published a report titled "China’s Existential Threat To America’s Auto Industry And Its Route Through Mexico," where it warns about the proliferation of Chinese companies for parts and vehicles setting up shop there and looking to get backdoor access to the American market.

The White House seems to have listened, as President Biden's administration issued a statement that it has started an investigation into the risks associated with the import of Chinese "smart cars" on national security grounds:

Most cars these days are "connected" – they are like smart phones on wheels. These cars are connected to our phones, to navigation systems, to critical infrastructure, and to the companies that made them. Connected vehicles from China could collect sensitive data about our citizens and our infrastructure and send this data back to the People’s Republic of China. These vehicles could be remotely accessed or disabled. China imposes restrictions on American autos and other foreign autos operating in China...

So today, I am announcing unprecedented actions to ensure that cars on U.S. roads from countries of concern like China do not undermine our national security. I have directed my Secretary of Commerce to conduct an investigation into connected vehicles with technology from countries of concern and to take action to respond to the risks.

It remains to be seen what will come out of this probe, but, if the ban on phones and cellular network equipment from Huawei is any indication, it may very well result in the restriction of Chinese electric car imports in the US.

American automakers could benefit from that, though Tesla is in its turn planning a Mexican Gigafactory that will replicate its entourage of Chinese component makers and material suppliers from Giga Shanghai there. It would be a balancing act, given that about 70% of the EV supply chain hails from China at the moment.

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