Feds Killed Polestar and Spared Volvo
thedrive.com
thedrive.com
Maybe Volvo still does and it's a mystery why they can still sell here. Maybe Volvo doesn't and there is no story here.
But if the car talks to China and gets updates from China, the US doesn't care if it's built here.
The onus is on the commentator to substantiate his claims of there being a rationale.
It is from the Biden era too, nothing to do with "this administration". Just common sense governing.
Software these days is distributed and globalized in virtually every sense. Polestar is headquartered in Sweden and much of their software development is in the UK.
The devs, in the UK or not, will do what it tells them to do.
The question isn't "why ban Polestar", it is "why ban Polestar without banning Volvo". They are both headquartered in Sweden, they are both owned by the same conglomerate, and they are often even both manufactured in the same factories. So what makes them different enough to warrant banning only one of them?
It appears to be a general ban on "connected vehicles" controlled from certain countries even if built in the US[1], so I would guess that Volvo does not meet the criteria for that.
1. https://www.topgear.com/car-news/usa/polestar-has-been-banne...
If we have problems with consumer-hostile behaviour like tracking users, remotely disabling vehicles, or other things like that we should outlaw those behaviours in products used in the US.
We will never do that because Western auto manufacturers want to be able to behave badly in the same way Chinese manufacturers might and they have a firm grasp on the American governments leash.
'Its from China' is a dumb reason not to allow a product into the market. If there are specific features, standards, etc that should be followed, enforce those.
"its from China" is a good reason for many countries. A lot of countries are currently worried about their dependence on the US. They would have a lot more to worry about if they were dependent on China. Is it a good idea for European countries to put themselves in a position where China could disable half the vehicles in their country? The same for every Asian country that might have a dispute with China. Just borrowing money from China has proved to be a disaster for some Asian countries even without a dispute.
Why is it that when we deal with China it's acceptable not to trust the vendor but when we buy from literally anyone else we have to accept the enormous number of backdoors and implicit spying that comes with it?
China isn't the problem. The perverse incentives created when we don't own our own gear is.
Yes, dream on. How are you going to politically push through something very few people even understand? I covered this is in the first line of my comment.
> Why is it that when we deal with China it's acceptable not to trust the vendor but when we buy from literally anyone else we have to accept the enormous number of backdoors and implicit spying that comes with it?
You have to accept it from someone. You seem to have missed my point that for many people (and countries) trusting Chinese vendors is worse than trusting the alternatives.
A junior engineer on the x-500 future fighter jet drives a polestar and seems to be visiting the house of a single woman (which they know from tiktok days) while his family would probably think he would be at work. Will this guy throw away his family or start handing over USB keys?
Any even mildly intelligent politician is going to try and block this ability.
How many domestic automotive manufacturers does America have, and how many times has the current administration threatened annexation of their Northern "ally"?
This is, at best, hypocrisy; and being on the recieving end of the annexation threats, I'm disinclined to use the most generous interpretation of America's "Rules for me but not for thee" attitude
Countries have been spying on each other (and their citizens) for centuries. Its not hypocrisy so much as run of the mill geopolitics.
Also, this rule is from the Biden administration, not Trump.
Don't double the problem before you try to fix it.
Like it or not, China is the world's factory now. The west has decided it doesn't want to dirty it's hands making things anymore, so it is what it is. Make reasonable, standard daylight firmware a required feature of all these devices and you simultaneously solve about a thousand problems.
But yeah this thing is likely more protectionism.
I would so rip out the 5G module after buying a car.
In fact I'm currently having these annoying spam calls from my ISP because I replaced their shitty fibre modem with my own ONT and Unifi router. But now they're constantly calling me to make a maintenance visit because they think it's down. I tried telling them once but apparently this is not an option in their stupid scripts. I just blocked their number in my phone in the end.
The battery, engine and everything else is absolutely Chinese made. I don’t know how much assembly there is honestly but i feel the Geely, err i mean Polestar was a little close to that line.
I will say the laws around this indicate just how ridiculous tariffs can be. There’s always some line to press up against and honestly if electric motors, batteries, car bodies and wheels from china have different tariffs to a car as a whole it’s always going to lead to china shipping those parts in an easy to bolt together way to ‘make a car’.
"Ford imported all of its first-generation Ford Transit Connect models as "passenger vehicles" by including rear windows, rear seats, and rear seat belts.[1] The vehicles were exported from Turkey on ships owned by Wallenius Wilhelmsen Logistics (WWL), arrived in Baltimore, and were converted back into light trucks at WWL's Vehicle Services Americas, Inc. facility by replacing rear windows with metal panels and removing the rear seats and seat belts.[1] The removed parts were not shipped back to Turkey for reuse, but shredded and recycled in Ohio.[1] The process exploited the loophole in the customs definition of a light truck; as cargo does not need seats with seat belts or rear windows, presence of those items automatically qualified the vehicle as a "passenger vehicle" and exempted the vehicle from "light truck" status. The process cost Ford hundreds of dollars per van, but saved thousands in taxes.[1]"
There's a whole industry around reverse engineering tariff classifications to find ways to minimize all-in manufacturing cost.
For example, let's say you sell air purifiers.
Option 1 is to import an air purifier and pay the 25% tariff (or whatever the actual duty rate is) on air purifiers.
Option 2 is to import a widget that gets classified as a fan (with 5% duty) and import a widget that gets classified as an air filter (with 10% duty), then put them in the same box somewhere in the US.
Both are sold to consumers as an air purifier. But one of the options minimizes total cost to the manufacturer.
But politicians can never resist exceptions and carve outs and then the game starts again
Isn't that just going to further advantage multinational corporations that don't have to move currency in order to move resources because they're all within the same corporation?
Otherwise if you make everything in China and sell it in the US you'll eventually have to transfer USD from your US operation to your Chinese operation to pay suppliers, labour, taxes etc.
But eventually you do have to pay the workers and taxes in China in yuan, and ultimately that money comes from the US consumer, making some kind of US capital account transaction inevitable?
Maybe I'm missing something but I think it does work because ultimately a current account deficit mathematicaly has to be exactly balanced with a capital account surplus. You can attack the current account side with tariffs, but it's actually more elegant to attack the capital account surplus instead
The thing you're missing is that money never actually has to cross the border when both parties to a transaction are on both sides of it. Corporation A gets money from the US consumer and pays it to Corporation B. The money is still in the US. It now belongs to Corporation B who invests it in US stocks etc. In exchange Corporation B provides <something> to Corporation A outside the US, which Corporation A can then convert into yuan outside the US.
It's equivalent to how money laundering works and why AML laws are a burdensome farce with a ~0% effectiveness rate.
Every country will have zero current account deficit which is getting you a long way towards what people are trying to achieve with tariffs. You could still have a trade deficit because of foreign investment income, but nothing like the massive imbalances that are seen today.
Just mathematically, the only way you can balance a huge trade deficit is with an equally huge financial account surplus. There is no way for everything to be made outside the US and bought by people inside the US indefinitely with no cross-border financial flows.
What you’re talking about is something like a hawala system, which works but it will only work indefinitely if flows in both directions are balanced, otherwise at some point you will have to move money to settle up
"Dolls," which represent human beings, are taxed at almost twice the rate of "toys," which represent something not human - such as robots, monsters, or demons. As soon as they read that, Sherry and Indie saw dollar signs. it just so happened that one of their clients, Marvel Comics, was importing its action figures as dolls. And one set of action figures really piqued Sherry and Indie's interest: The XMEN, normal humans who, at around puberty, start to change in ways that give them strange powers.
So Sherry and Indie went down to the customs office with a bag of XMEN action figures to convince the US government that these mutants are NOT human. That argument eventually became a court case that went on for years.
The Volvo distinction is ... I mean maybe the Volvo software stack is in Europe or the US. Maybe it's also in China!
I do not really subscribe to this philosophy but what's going on isn't a "Polestar would be tar riffed" thing. It's an outright "you can't sell em" thing
Unfortunately, this doesn't seem to be that.
It's a perfectly valid concern, obviously. However in the current context of a blatantly corrupted government this might be a squeeze for money or just something done out of spite.
In 1999 Swedish Volvo spins out and sells Volvo Cars to Ford (Volvo Sweden continues making trucks and heavy equipment) for 6.45 B USD.
In 2010 Ford sells Volvo Cars to Geely for 1.8 B USD.
iN 2017 Geely spins out Polestar from Volvo Cars. In 2021 Geely IPOes Polestar at NYSE for 20 B USD.
Leonardo DiCaprio-Backed Electric Automaker Polestar Valued At $20 Billion In SPAC Deal
https://deadline.com/2021/09/leonardo-dicaprio-backed-electr...
Polestar, the electric vehicle company backed by Volvo of Sweden and Leonardo DiCaprio was valued at $20 billion in a SPAC deal that will take it public.
Steve Jobs later called and bought his company.
Feds deny Polestar authorization to sell cars in US from model year 2027
If you meant specifically trade and state secrets - well, there has been a well established practice of handling such in for example court system and other public proceedings/disclosures/FOIA/etc..
Volvo probably employs several 1000s of people throughout the US from decades of dealerships, workshops, second hand sales etc, and they have a relatively large factory in the US.
Polestar OTOH has no factories and use direct-sales instead of going through dealerships.
So it's likely that Volvo generates a lot more value inside the US than they extract, while Polestar probably doesn't.
Not sure what you mean here but I suspect we're talking about different things. Payroll is obviously value created by the business that's directly given to the society where the business operates, and it's not uncommon that it's higher than the company profits.
Take Amazon for example, payroll costs are much higher than the profits.
Car companies also create a secondary maintenance and repair business, insurance and financing business, resale business and so on that generate more value in the country they operate as well.
So I find it likely that a well established car brand like Volvo generates more money that stays in the US than they generate money that is extracted out from the US.
That counts the value twice though. The value of the labour is precisely the payroll and the profits so it's accounted for.
Edit: So simply put, Volvo (or any other co with a factory in the US) operates a business that generates a lot of payroll and some profits, and the payroll remains in the US.
But Geely can throw down the gauntlet by building Polestars and relabeling them Volvos.
It's all just this lawless personal fealty shit.
Are the people who don't like it going to withdraw those powers the next time they have the opportunity? The main alternative is more of this.
Yet the US government seems happy to play games like this; there must be someone thinking - hey the shoe could soon be on the other foot? Maybe we should cool it a bit ...
Same goes for Thinkpad/Motorola, but I guess there at could argue these are not original Chinese brands.
Uh, about that.. https://docs.fcc.gov/public/attachments/DOC-416839A1.pdf
is their presence tiny or are they nowhere? you can't have both, something something moving the goalpost...
> If you go to the US, you will see Chinese brands nowhere.
You'll see the above very commonly in people's homes and on people's phones in the US. You're making the mistake of limiting your view to "retail businesses on the street" when those have been going out of fashion in the first place. All of the above are brands that are commonly seen in the US and a lot of people (especially those under 30) are familiar with.
Honestly, I think that ship has sailed, most users don't want the vents visible at all anymore, and that means no little tabs. I agree it's a bummer, but it's like 400th on my ranked priority list of things to care about when buying a car.
Honestly, until Rivian, all the other EVs were so bad that it didn't make sense to get the pyrrhic victory.
You're right, it doesn't make any difference to Elon. I'm not doing it to hurt Elon, I'm doing it for me, because I don't want to be putting my hard-earned money towards his enterprises. It's the same reason why people will stop buying products from companies who use sweatshops with child labor, etc.
> Honestly, until Rivian, all the other EVs were so bad that it didn't make sense to get the pyrrhic victory.
Absolutely. And I was huge fan of Tesla in the beginning, put a deposit on the 3 model when first came out years ago, before Elon went off the rails. Thankfully now there are more options.
But what annoys me the most about the article is this constant praise of „China Speed“, Cost-Advantages and Love of the Free Market, as if not every single Chinese Automaker, including its Suppliers down to the tiniest screw is a State owned entity, massively subsidized and in general part of a rigged market.
This is not to take from the accomplishments of the Chinese, but a major part of the last 30+ years of development is just massive screwing and exploiting the western open market and its companies. Yeah, we’ve not forgotten the droves of people blatantly stealing IP on every trade show imaginable and a state completely absent from enforcing IP when ever another Chinese car is dropped to the market that looks 100% like a Benz, Porsche or Land Rover.
First, a "subsidy" is just govt tax money. In other words it comes from somewhere. It is, in effect, the Chinese people, contributing to the creation, or development of an industry. Clearly the Chinese govt thinks this is a sound commercial strategy, and certainly from here (considering their global dominance in manufacturing) it appears to be working.
Secondly, it's not like all countries don't subsidize industries of their own. Although their decisions of what to subsidy varys a lot.
For example the US subsidizes weapons production. To the tune of a trillion $ a year. That spills over a bit into commercial stuff (Boeing for example.) And sure, there is some export value (although that may decline in the long term given current political isolationism.)
Of course you can't spend a trillion a year if the storehouse is full. It's necessary to expend some munitions from time to time to make room for new ones. But I digress.
To go back, when people complain that US products are expensive because of Chinese (or other) subsidies- just be aware that the US subsidizes more than most. They just target industries that have little to no economic value to US citizens, and which can't be purchased by domestic or indeed foreign citizens.
The US could easily subsidize electric cars, or solar, or wind manufacturing but it chooses to subsidize airplanes and naval ships and tank builders instead. It chooses to spend money on 2 million employees (armed forces) rather than on 2 million factory workers, or day-care facilitators, or health-care workers.
I'd say you can certainly compare them though, and US ones are in the same order of magnitude- although it gets worse if you adjust for population size.
For example, the US subsidizes the defence industry to the tune of a trillion $ a year. (As a % of total federal budget the US spends about double that of China.)
Do you think other countries do not subsidize their own automakers? What about the US government bailing out the entire US auto-industry during the GFC? To this day the French state owns 15% of Renault-Nissan and has given this company many tax breaks for the last 30 years or so just to keep some of the production in France.
It's too easy to dunk on China when the rest of the world has been doing the same exact thing for god knows how long but nobody had a problem with that as long as the EU/US auto-makers were making money hand over fist. Now, that it is changing, all of sudden everyone is screaming that China is the devil when it basically follows the same exact playbook.
As for free market argument, it is arguably harder to compete as a Chinese company in China given the cut-throat competition happening now than in the west and contrary to most of the western governments who would be too scared to let Ford or Renault fail for example, the Chinese government is very happy to see that some of its auto companies are failing because it means that the remaining ones are performing much better and have to keep innovating to succeed.
That is why the Chinese automakers are steamrolling the competition at the moment, they give people what they want: innovative products at a fair price point.
As it's been said many times in the past, don't hate the player, hate the game.
"15% of a distressed key industry player" is a completely different ballgame than being an actual SOE, with insane amounts of subsidies let alone absense of any red-tape for these party-run corporations, and a market that forces foreign car manufacturers to set-up shop as a "joint-venture" were the "joint" is more akin to being sucked out, never allowed to be more than 49% owned by the foreign company and a general impossibility (unless you do some HK trickery) to transfer any profits made in China out of China.
What you are doing is not just intellectual dishonest, not just whataboutism, it is comparing apples with oranges.
Edit: And we haven'T even begun discussing the glaringly state promoted IP-theft.
Since we are talking about Renault specifically, I will assume that you are not French otherwise you would not have written your comment.
Basically, it comes down to this, France is Renault and Renault is France. The French state has a 15% stake because it wants to influence the board, keep jobs in France and it will do that even if Renault loses money just like it did before Renault was privatized in 1996.
The French state will never let Renault fail and will always be there as a backstop if push comes to shove which is to say, it is there to make sure that if Renault needs cash it will give it. In 2021, at the height of the COVID period, the French state was ready to re-nationalize Renault instead of seeing it dissapear if necessary.
Then we have the countless subsidies and programs created all over the years so that French people buy newer vehicles from EU car makers. The same was done after 2008 when there was the massive cash for clunkers program to stimulate demand.
All of this money is coming from the state coffers, taxes paid to subsidize the purchase of new cars which benefits Renault and Peugeot immensely since these two brands are very strong in France.
So even though in practice the French state doesn't own a majority stake, it may as well because it will do anything it can to protect and help Renault keep it's market share.
Furthermore, nothing at Renault gets done without the French state's approval. If the French government thinks a merger is not good, it won't happen. If Renault wants to lay off people, it will have to through the government first, the unions second and only then will it happen.
As for the part of your comment regarding the profits out of China, that was not part of my response and not part of the original comment either so I am just going to ignore it.
Regarding the IP theft, every car makers steals from the competition. My uncle's job at Renault was to buy cars from their competitors and take them apart bit by bit to understand everything that was under the hood and then make recommendations to his bosses about all the new tech they found so that they could build their own version of it and include it in their newer models.
The point of the joint venture is moot. This is China's business model. If you want to sell cars there, you have to do it their way. It's the same exact playbook that the EU is using against the US tech companies by forcing them to comply with EU regulations if they want to keep distributing software and products here.
Don't want to comply, then no one is forcing you to do it. You just won't sell anything in China and that is that. Same goes for the EU.
Finally as another commenter said above, every country worth their salt on this planet is protecting to some extent their domestic champions, whether in the arms, space, car, food industry and whatever else. It's just the normal thing to do.
So you can complain about China all you want, it is doing exactly what the rest of the world has done for decades, but the difference now is that the Chinese brands are no longer the laughing stock of the car market.
They are leading in terms of price, quality and innovation and this reaction from the US government and the EU to apply tariffs on Chinese automakers is just a desperate attempt at stopping the flood of superior products.
That in itself is ironic because since Trump was elected and then re-elected, it's been a constant thing from the EU politicians to rally against the US tariffs just so that they can turn around and implement tariffs on China themselves.
When Germany sold millions of cars in China, that was just good business, when China does it in the EU, they are "dumping" their "over-production". When the US implements tariffs on EU companies and products, that is because Trump is an idiot who likes to start trade wars but when the EU does it on China, then it's simply "protecting" its industry.
I am honestly sick and tired of this double-speak, do as I say not as I do type of attitude coming from the most western countries. The western companies should stop whining and try to compete with China instead of crying because China just beat them at their own game.
I'm not saying "trust the government", not at all. But meddling in China trade is absolutely not meddling with the free market.
Ideally what you would want is to get China to stop doing that, but now propose a mechanism to get them to.
China subsidizes (among other things) battery manufacturing, which is the biggest single cost for making EVs. If you get your batteries cheaper than competing companies then you can make premium cars with an electric range at the high end of the market and then use the subsidized cost to provide other amenities that cause customers to choose your product over alternatives even at a premium price. It allows you to take the high end of the market on value just as well as the low end on cost.
because trade balances are established by free markets, but China doesn't allow many of our goods and does not allow free market competition. Also "strategic dumping" to establish supremacy in markets which can later be exploited.
also, "free market" does not have anything close to a precise meaning; i used it because you used it but it's highly ambiguous, better to rephrase sentences to accurately include the phrase "market clearing price" while identifying external strictures which might move the market clearing price away from where it should be.
https://www.mozillafoundation.org/en/privacynotincluded/cate...
Polestar is predominantly Chinese-owned. Federal Connected Car Rules instituted a ban on the company selling cars in the United States.
I don't see any of those on the mozillafoundation page, per @andsoitis.
It is silly to credulously pretend that the excuse about Chinese software has even a whiff of legitimacy.
(Though I thought that anybody as smart as you think you are would've inferred that without issue)
So while I didn’t quite follow that reference, it’s true that if Trump were to ban them for simply being owned by China, then he’d be kind of screwed because he’d then have to ban all his own merch like the Trump phone and his made-in-China MAGA hats.
Disregard this parent's bias.
As I mentioned above, it's not fringe to ban Chinese hardware for security concerns. They've been surreptitiously planting undisclosed control equipment. [0] No company would knowingly add more costs and complexity for nothing in return. And if the Chinese maker didn't know about the trojan tech, then it's even more concerning.
[0] https://www.reuters.com/sustainability/climate-energy/ghost-...
Volvo got a waiver from the Trump admin no problem. Polestar could not get their waiver from the Trump admin.
I expect Polestar will eventually get their waiver, once Elon has less clout. Until then, Elon has tariffs keeping china-made EVs uncompetitive, and this program that deals with Chinese companies that setup shop in America.
You might want to re-evaluate your political bias.
There is precedent. And it's not just the US that's concerned about Chinese stealth tech.
[0] https://www.reuters.com/sustainability/climate-energy/ghost-...
[1] https://insideevs.com/news/774024/volvo-software-ex90-fixes/