The United States imposes tariffs on Chinese electric vehicles, and Alphabet's Waymo may suffer

On August 13, Waymo's plan to expand its robot taxi fleet encountered new obstacles due to the US government's imposition of temporary tariffs on Chinese electric vehicles.

Alphabet's Waymo originally planned to launch a new fleet of self-driving taxis produced by Geely's subsidiary Zeekr. The vehicles were designed in Sweden with participation from Geely's Volvo. Waymo was responsible for installing the necessary self-driving hardware and software in the vehicles. Earlier this year, the first batch of new cars began to arrive in the United States.

However, these vehicles may be affected by the Biden administration's new restrictive tariffs, which are aimed at blocking Chinese electric vehicles from entering the U.S. market. The U.S. government previously said it plans to increase tariffs on Chinese-made electric vehicles from the current 25% to 100%, a measure expected to take effect later this year.

In addition, the U.S. Commerce Department plans to announce new rules that will ban the use of Chinese software in self-driving and connected cars operated in the United States.

A wide range of products could be affected by the new tariffs, especially electric vehicles. The share of Chinese-made electric vehicles in total vehicle sales is expected to jump to nearly 50% this year from 6% in 2020, as China quickly becomes the dominant force in the electrification of the global auto industry.

Waymo now says it is monitoring the situation closely and insists that the self-driving software in its vehicles does not come from China.

The first self-driving car built by Zeekr debuted in California earlier this year. Waymo declined to say how many of the vehicles it has imported so far or whether the tariffs would change the number of vehicles the company ultimately plans to deploy.

“We are monitoring the tariff issue closely,” Waymo spokesman Ethan Teicher said in an email. “We have begun on-road human-driving testing of the sixth-generation Waymo Driver on the Zeekr vehicle platform and have no new information on its public deployment.”

As for the U.S. Commerce Department's ban on using Chinese software in self-driving cars, Teicher said Waymo is taking a wait-and-see approach.

“We will not be able to consider commenting until the Commerce Department’s rules are finalized," he said. “It is worth noting now that our self-driving system, the Waymo Driver, is designed and assembled in the United States.”

Today, Waymo's fleet consists primarily of Jaguar I-Pace electric crossover SUVs, which operate primarily in San Francisco, Los Angeles and Phoenix, and are about to launch in Austin. According to a recently filed software recall, Waymo has about 670 self-driving cars in its fleet.

The vehicle, built by Zeekr, was meant to be a low-cost option for Waymo, which has spent billions of dollars over the years. Waymo has also raised the possibility that its new self-driving taxis might not have traditional controls, like steering wheels and pedals, to further reduce costs. (Though the company would need regulatory approval before putting fully driverless vehicles on public roads.)

Compared to Waymo's current self-driving cars, the Zeekr vehicle can carry five passengers. This could help Waymo compete with human-driven ride-hailing services such as Uber and Lyft.

But if those vehicles are affected by tariffs imposed by the U.S. government, Waymo may need to rethink its plans to expand into new cities with brand new vehicles.