China’s economic downtrend began after 2016 when the U.S. imposed escalating trade wars. This worsened when U.S. President Joe Biden warned that Chinese vehicles posed risks to national security.
Biden cited China’s determination to dominate the future of the auto market, which includes unfair practices. As a result, China’s policies could flood the U.S. market with its vehicles. Biden’s policy is that of trade protectionism that benefits U.S. automakers. Tesla (TSLA) benefits the most. Financial losses from EV projects run by both Ford (F) and General Motors (GM) will slow.
The President said that China’s connected vehicles could collect sensitive data about its citizens. For example, cameras on such vehicles could capture photos and videos of people and infrastructure. The warning weakens the prospects of Nio (NIO), Xpeng (XPEV), Geely, BYD, and Li Auto (LI). While Li Auto is thriving in China, the other firms are struggling to sell vehicles. China’s economy is getting worse, so people are prioritizing paying down their residential mortgages. Chinese consumers rank buying a pricey vehicle as a low priority.
The U.S. does not need inexpensive Chinese vehicles. Consumers are also cutting back on vehicle purchases. They will buy gas-powered, used vehicles first before buying a Tesla.
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