A row of new energy vehicles are parked at Changan Automobile’s vehicle distribution center in Chongqing, China, on January 14, 2024.
Costfoto | Nurphoto Getty Images
Shares of Chinese automakers climbed Tuesday, shrugging off the US government’s proposal to tire certain types of vehicles equipped with car parts from China and Russia, amid a public rally after Beijing announced easing policy.
Hong Kong is registered Li Auto increased by more than 8%, while Nio increased by 9%. BYD shares rose 2.7%, while Geely added 3.3%. Leapmotor jumped 4.35%.
The proposed rule would ban the import and sale of cars with special vehicle communication systems or automated driving systems with hardware or software related to China or Russia. The system enables external communication, such as Bluetooth, cellular, and Wi-Fi modules.
Joe Biden’s administration has cited national security risks for its latest move aimed at curbing the influence and reach of China’s auto industry in the US.
“Cars today have cameras, microphones, GPS tracking, and other technologies connected to the internet. It doesn’t take much imagination to understand how a foreign adversary with access to this information could pose a serious risk to our national security and the privacy of our US citizens,” he said. Commerce Secretary Gina Raimondo.
Software restrictions will be implemented for model year 2027, while those on hardware will begin for model year 2030, or January 2029, for units without a model year.
The rally in the auto sector today was mainly driven by the overall market condition in Hong Kong, which is related to the support provided by the PBOC, said Ivan Wu, an equity research analyst at Guotai Junan International.
Governor of the People’s Bank of China Pan Gongsheng said at a press conference on Tuesday that the amount of cash banks must have on hand, known as the reserve requirement ratio, or RRR, will be cut by 50 basis points. He also announced that the PBOC would cut the 7-day repo rate by 0.2 percentage points, among other measures.
The U.S. proposal to ban Chinese auto parts may not have a direct negative impact on China’s auto industry because the sales volume of Chinese auto exports to the U.S. market is “very small” and limited, Wu said. In addition, Chinese parts companies have set up factories in South America, which can be exported directly to the US market under the US-Mexico Tariff Agreement, he added.
According to the China Automobile Dealers Association (CADA) recently, car dealers in the country suffered a total loss of 138 billion yuan ($19.55 billion) in the first eight months of the year as they were forced to sell new cars at significant discounts.
