Introduction

Introduction

Biden's harsh measures may ultimately boomerang on him.

With the change of US government administration looming just days away, Biden, whose term is drawing to a close, has chosen not to spend his final days in tranquility. Instead, before his departure, he has made a significant move in the automotive industry by imposing a comprehensive ban on Chinese smart vehicle hardware and software.

On the eve of the power transition, this ban can be characterized as a "desperate measure." Coupled with recent US government regulations on artificial intelligence chip controls, Biden's actions have been dubbed by the industry as a "final frenzy."

The new round of regulations focuses on hardware and software integrated into the Vehicle Connectivity System (VCS) and software integrated into the Autonomous Driving System (ADS). These components enable smart connected vehicles to achieve external connectivity and autonomous driving functions.

This rule has a wide-ranging impact, even prohibiting entities owned, controlled, or subject to the jurisdiction of China from selling smart connected vehicles in the United States, even if manufactured there. The ban will restrict software from 2027 and hardware from 2030.

In 2024, Biden first increased tariffs on Chinese electric vehicle exports from 27.5% to 100%, aiming to hinder their entry into the US market. Subsequently, he imposed heavy taxes on key components such as power batteries, lithium, and upstream materials. The new regulations on smart connected hardware and software technology have effectively severed the normal channel for China's automotive supply chain to enter the US.

Furthermore, the US has imposed stringent global export restrictions on domestically produced AI GPU chips, categorizing countries and regions into three tiers based on the computing power of the chips deployed. Each tier has different sales restrictions:

- Tier 1 includes the US's core allies, the G7, and 18 countries and regions such as Australia, New Zealand, South Korea, Taiwan, China, and the Netherlands. These regions can use AI chips produced in the US with almost no restrictions and freely deploy computing power within their borders.

- Tier 2 encompasses most countries not in Tier 1. The US plans to impose total computing power limits on these countries, with each receiving a maximum of approximately 50,000 AI GPUs from 2025 to 2027. Exports exceeding this limit will be subject to quantity and license restrictions.

- Tier 3 targets countries such as China (including Hong Kong and Macau), Russia, and Iran, which will face the strictest regulatory restrictions, with an almost complete ban on the import of US-produced AI GPU chips.

This new regulation is Biden's strictest chip order targeting China, impacting not only China's artificial intelligence industry chain but also high-end chips used in intelligent driving.

The two latest bans are akin to two sharp knives, one aimed directly at China's smart connected vehicles and the other indirectly at China's intelligent driving. Their true intentions are quite obvious.

In the Biden Administration's view, by blocking advanced chips, China's chip industry chain will be forced to rely on the US. However, reality is vastly different. Harming the enemy often backfires.

Immediately after the new ban was announced, NVIDIA became agitated. The company released a "Statement on the Biden Administration's Misguided 'AI Proliferation' Rules" on its Chinese official website. In essence, it stated that Biden made a significant move before stepping down without consulting the US industry and leading companies. This is an overstep that directly harms NVIDIA's market interests and the long-term interests of the US semiconductor industry. It is hoped that the industry will take action next!

In today's highly globalized semiconductor industry and tightly integrated automotive supply chain, the Biden Administration has chosen to erect numerous "high walls," effectively isolating the global technology ecosystem and intelligent industry chain from the outside.

Moreover, China's automotive manufacturing industry has already established a system advantage in the era of intelligence and electrification, which cannot be weakened by "blockades" or "containment."

Reuters reported this week that Chinese officials and automakers are eyeing the soon-to-be-closed Volkswagen factory in Germany and are interested in potential acquisitions.

Volkswagen has always been a symbol of German manufacturing. Acquiring the Volkswagen factory would enable Chinese automakers to establish a deeper influence in Germany. Over the past few years, China has invested in a series of industries such as robotics in Germany, but has yet to establish a large-scale automotive production base there.

If the acquisition is successful, China can produce cars in Germany and sell them in Europe, avoiding tariffs associated with importing electric vehicles from China to the European Union. It is reported that bids may come from Chinese private enterprises, state-owned enterprises, or joint ventures, and the government will also approve the right to invest overseas, participating in relevant bids from an early stage.

A source from the German Foreign Ministry stated that for the German automotive manufacturing industry, China has developed into a systematic competitor. Today's China is no longer intimidated by the high walls of the United States. Biden's harsh measures may ultimately boomerang on him.