Foreign Spy Cars? The US Government Isn’t Playing Around With Robotaxis.

Some Chinese automakers are going all in on driverless vehicle technology to develop robotaxis. But the US government is about to pull back the reins on Chinese testing of driverless vehicles in the US market due to national security. Here are the details and why it’s a big deal.

Going all in

China appears to be pressing the accelerator when it comes to developing driverless vehicles. It makes sense considering China accounted for nearly 62% of the 10.4 million battery-powered electric vehicles (EVs) that were manufactured across the globe in 2023; EVs are more easily adapted to driverless technology. For context, the US was ranked second and produced only 1 million, according to GlobalData.

Already, Chinese companies are heavily experimenting with driverless technology in their home market, with plans to continue that research abroad. Baidu operates a fleet of 500 robotaxis, often found without safety drivers, for emergencies in Wuhan, China. The company notes it plans to add another 1,000 vehicles. Sixteen or more Chinese cities have allowed Chinese companies to test driverless vehicle technology on public roads as their industry attempts to take a controlling grip on global driverless vehicle leadership.

Here’s the kicker, and perhaps part of why the US government is about to step in. Chinese companies have set up research facilities in the US and Europe and are sending the data and research back home, where it is not allowed to leave the country.

US response

The US Department of Commerce is expected to propose policy in August that would bar Chinese software in driverless and connected vehicles. More specifically, the Biden administration wants to propose policy that would bar Chinese software in vehicles in the US that possess Level 3 automation or above, as well as vehicles with Chinese-developed advanced wireless communication abilities.

In the 12 months that ended November 2022, Chinese driverless vehicles tested over 450,000 miles in California with autonomous vehicle technology, raising concerns about connected vehicles using driver monitoring systems to listen, record, or potentially control the vehicle.

“The national security risks are quite significant,” Commerce Secretary Gina Raimondo said in May, according to Autonews. “We decided to take action because this is really serious stuff.”

Why it matters

For investors, the long-term ramifications could be huge. The potential policy from the US government could slow down China’s ambitions for driverless tech, especially for automakers such as Childwhich has announced navigate-on-pilot (NOP) and autonomous driving as a service (AdaaS) for its ET7 sedan. The policy could also certainly stunt growth plans for Chinese auto BYDwhich just announced a deal with Uber Technologies to bring 100,000 EVs to the latter’s fleet.

Story continues

US companies that stand to benefit from the potential policy would be Tesla (NASDAQ:TSLA), General Motors (NYSE: GM)and Alphabet‘s Waymo. While Ford Motor Company and Volkswagen threw in the towel on developing their driverless vehicle technology, Tesla could rebound from its delayed robotaxi unveiling, now coming in October, and have less competition. It would also give General Motors more time to rebound from its shutdown of Cruise operations.

Ultimately, for investors, it will be increasingly important to watch a number of automotive developments between the US and China as well-built, highly affordable, and also heavily subsidized Chinese EVs attempt to break into the US market with or without driverless technology. The US government is currently stepping in because allowing that at this time could cripple US EV and autonomous development in the near term — and that would be bad news for many investors.

Should you invest $1,000 in Tesla right now?

Before you buy stock in Tesla, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Tesla wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $643,212!*

Stock Advisor Provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of August 6, 2024

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Daniel Miller has positions in Ford Motor Company and General Motors. The Motley Fool has positions in and recommends Alphabet, BYD Company, Baidu, Tesla, Uber Technologies, and Volkswagen Ag. The Motley Fool recommends General Motors and recommends the following options: long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy.

Foreign Spy Cars? The US Government Isn’t Playing Around With Robotaxis. was originally published by The Motley Fool