Reuters Events-US automakers urged to innovate despite tariffs on Chinese rivals By Reuters

By Nora Eckert and David Shepardson

DETROIT (Reuters) – Leaders from American 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 some short-term relief.

China’s BYD (SZ:) and other rivals are building low-cost and technologically advanced battery-powered vehicles, largely outpacing what the U.S. has to offer. Auto executives and government officials emphasized at the Reuters Automotive USA conference the need for American companies to retain a sense of urgency.

Peter Rawlinson, CEO of electric-vehicle startup Lucid (NASDAQ:), said he views the main battle with China as one over superior tech, because it is so difficult to match Chinese efficiency on cost. 

On some battery chemistries, integration of autonomous-driving functions, and user interfaces, Chinese cars are often hard to beat, Rawlinson said. However, on what he calls “core EV tech,” they are not as sophisticated as Tesla (NASDAQ:), Rawlinson said, adding that “they’re playing catch-up fast.” 

Some in the auto industry are grateful for the Biden administration’s aggressive approach on tariffs, although others – such as Stellantis (NYSE:) CEO Carlos Tavares – have mixed feelings, seeing it as a potential self-made trap.

Ramiro Gutierrez, president of German automotive supplier ZF’s North America team, said these aggressive steps against Chinese competitors are needed. 

“If there were no tariffs right now we’d be in real trouble,” he said. He added that Chinese rivals typically run three engineering shifts to the usual one per day in the U.S., and that Chinese companies are more focused on consumers and are generally faster at development than U.S. companies.

The U.S. government is stepping up efforts to protect industry stateside. 

The Biden administration’s proposed ban on Chinese connected-car technology, announced last month, would effectively bar Chinese vehicle imports – or those from Chinese automakers from other countries. The move is seen as one of Washington’s sharpest attempts to ward off foreign competitors.   

Also last month, the Biden administration locked in steep tariff hikes on Chinese imports, including a 100% duty on electric vehicles, to boost protections for 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,” U.S. Energy Secretary Jennifer Granholm said this week at the Reuters event. She added, referring to government incentives to boost EV and battery production and sales and semiconductor chips: “We are not just bringing a knife to a gunfight. We are bringing an armada now.” Granholm has also touted tariffs on Chinese vehicles.

Republican presidential candidate Donald Trump has also vowed to impose tariffs to prevent Chinese automakers from exporting vehicles to the United States from Mexico.  

Danny Shapiro, head of chipmaker Nvidia (NASDAQ:)’s automotive division, said he recognizes in China a willingness to invest in enabling greater software power in its vehicles. He said Detroit, by contrast, often seems to have the mindset: “What’s the cheapest thing I can put in to get by?”

He noted the importance of China as a big market and said Nvidia is able to sell to Chinese companies despite U.S. government restrictions. It has designed new products to meet requirements.

“We comply with every law,” Shapiro said. “The speed limit was here – we drove under the speed limit – well then they lowered the speed limit again.” He said Nvidia’s in-vehicle products “are not restricted in any way.”