[News Article] Hyundai Motor, Kia urged to diversify supply chains as US moves to regulate Chinese c…
Hyundai Motor, Kia
urged to diversify supply chains as US moves to regulate Chinese connected cars
By
Lee Min-hyung, The Korea Times - Hyundai Motor and Kia need to diversify their
parts supply chains beyond China and expand their lobbying efforts to prepare
for potential U.S. measures aimed at banning Chinese-connected vehicles,
according to experts, Thursday. This
reaction follows a series of warnings issued by the U.S. Department of
Commerce, highlighting concerns that connected cars manufactured by Chinese
companies could pose national security threats by potentially leaking sensitive
data on American motorists to the Chinese government. On
Wednesday (local time), U.S. Commerce Secretary Gina Raimondo announced that
the department will issue rules on Chinese connected vehicles this autumn and
consider taking "extreme actions" against them due to security risks. However,
since the U.S. government has not yet clarified the specifics regarding the
scope of connected vehicles, the recent announcement has sparked concerns that
Korean automakers may also face broad and comprehensive regulatory risks from
the U.S. Automobile
industry analysts said local carmakers should come up with specific action
plans by preemptively diversifying their supply chains. “Hyundai Motor and Kia have to brace for the
worst by reducing their reliance on China and broadening their supply chains
into other countries such as Vietnam,” Lee Ho-geun, an automotive engineering
professor at Daedeok University, said. “There stands a possibility that the U.S. will
regulate any connected vehicles that are equipped with Chinese parts. Under the
scenario, the Korean automakers will be seriously affected, so they are advised
to make more efforts to reduce the proportion of Chinese parts in their
automobiles.” Even
if this may end up increasing the initial costs, maintaining the status quo
could result in a larger financial burden for Hyundai Motor and Kia in the long
run, according to the expert. “However, it is realistically challenging for
automakers to completely avoid using any Chinese components, even if they are
minor,” Lee said. “For this reason, the two home-grown automakers should appeal
more to the U.S. authority that their connected vehicles are free from any data
leak risks by proving that critical components are sourced in Korea and other
safe regions.” Other
experts urged the government and automakers to expand their lobbying activities
in the U.S., so they can map out more concrete countermeasures against the
upcoming regulatory hurdle there. “The automakers need to beef up their lobbying
actitivites and gain a clearer understanding of the regulatory direction from
the U.S.,” Kim Pil-soo, an automotive technology professor at Daelim University
College, said. This
will help them set up a specific Plan B or even Plan C, according to the
professor. “Leaving diverse scenarios open is a must, as the
U.S. authority has not shared any concrete regulatory direction, even on what
exactly the regulated connected vehicles are,” Kim said. From
the viewpoint of Korean automakers, the regulatory action by the U.S. can be
widely seen as a political gesture in its power struggle with China. But as of
now, there is no clear breakthrough or solution to this situation, according to
the professor. “Hyundai Motor Group may have to leave all
possibilities open,” he said. “They have no clear strategies to take, other
than expanding the lobbying activities for swift decision-making to the
upcoming regulation.” Last
month, the Korean government and a local automobile association conveyed their
concerns about the U.S. regulation to the U.S. authorities. They requested
clarification on the scope of connected vehicles that would be subject to the
regulation. Source:
https://www.koreatimes.co.kr/www/tech/2024/05/419_374762.html
2024.05.17
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