By Nora Eckert and David Shepardson
DETROIT (Reuters) – Leaders of U.S. automakers and their suppliers said at a Reuters event in Detroit this week that the industry cannot afford complacency, while tariffs on Chinese competitors provide short-term relief.
China’s BYD (SZ:) and other rivals are building cheap and technologically advanced battery-powered vehicles, easily outpacing what the US has to offer. Auto executives and government officials at the Reuters Automotive USA conference emphasized the need for U.S. companies to maintain a sense of urgency.
Peter Rawlinson, CEO of electric car startup Lucid (NASDAQ:), said he sees the main battle with China as one over superior technology because it is so difficult to match Chinese efficiency on cost.
In terms of battery chemistry, integration of autonomous driving features and user interfaces, Chinese cars are often hard to beat, Rawlinson said. However, in what he calls “core EV technology,” they are not as advanced as Tesla (NASDAQ:), Rawlinson said, adding that “they are catching up quickly.”
Some in the auto industry are grateful for the Biden administration’s aggressive approach to tariffs, though others — like Stellantis (NYSE:) CEO Carlos Tavares — have mixed feelings and see it as a potential self-made trap.
Ramiro Gutierrez, president of German auto supplier ZF’s North American team, said these aggressive moves against Chinese competitors are necessary.
“If there were no tariffs now, we would be in real trouble,” he said. He added that Chinese rivals typically run three engineering shifts, compared to the usual one per day in the U.S., and that Chinese companies are more consumer-oriented and generally develop faster than U.S. companies.
The U.S. government is stepping up efforts to protect the United States industry.
The Biden administration’s ban on Chinese connected-car technology announced last month would effectively ban the import of Chinese cars — or those of Chinese automakers from other countries. The move is seen as one of Washington’s sharpest attempts to fend off foreign competitors.
Also last month, the Biden administration implemented steep tariff increases on Chinese imports, including a 100% tariff on electric vehicles, to increase protection of strategic industries from China’s state-driven industrial practices.
“There will also always be competitors who want to control our supply chains or flood the market with cheap imports, or take our (intellectual property) and talents and move our factories to their shores,” US Energy Secretary Jennifer Granholm said this week at the Reuters event. She added, referring to government incentives to boost production and sales of electric cars and batteries, as well as semiconductor chips: “We’re not just bringing a knife to a gunfight. We’re now bringing an armada.” Granholm has also touted tariffs on Chinese vehicles.
Republican presidential candidate Donald Trump has also promised to impose tariffs to prevent Chinese automakers from exporting vehicles from Mexico to the United States.
Danny Shapiro, head of chipmaker Nvidia’s (NASDAQ:) automotive division, said he recognizes a willingness in China to invest in enabling greater software power in its vehicles. He said Detroit, on the other hand, often seems to have the mentality: “What’s the cheapest thing I can do to get by?”
He noted the importance of China as a major market and said Nvidia can sell to Chinese companies despite U.S. government restrictions. It has designed new products to meet the demands.
“We comply with every law,” Shapiro said. “The speed limit was here – we were going under the speed limit – and then they lowered the speed limit again.” He said Nvidia’s in-vehicle products are “not limited in any way.”
