US Breaks Down! Encircling China's New Energy Vehicles

Making a move exposes weakness; the US tries all tricks to ban China's new energy vehicles.

In this showdown of new energy vehicles, who is actually breaking down?

This is a war where there is no "neck" to choke, and even more so, an encirclement doomed to fail!

How strong is China's new energy vehicle industry? Strong enough to stun even the world's number one... Strong enough that the US has started using tactics to limit Chinese tech companies like Huawei to block China's new energy vehicles.

But the question is, if two very representative Chinese listed new energy vehicle companies are put on the Chinese Military Enterprise List (CMC List), can it stop China's new energy vehicles from going global?

AutosKline believes this is futile! From raw materials to finished vehicles, the entire industrial chain leaves the US with almost nowhere to choke.

On June 8, 2026 (US Eastern Time), the US Department of Defense issued "Notice on Designating Chinese Military Enterprises". According to this notice, the US Department of Defense has listed the two most representative listed new energy vehicle companies in China—BYD and NIO—on the Chinese Military Enterprise List.

So, are two listed Chinese auto companies actually that powerful? Worthy of the US military's attention.

Subsequently, BYD and NIO issued announcements successively, roughly stating they are not Chinese military enterprises, nor are they military-civil fusion enterprises of the Chinese defense industry, and believing there is no justifiable reason to list the companies in this list.

On the other hand, this Chinese Military Enterprise List from the US Department of Defense is not a sanctions list. Being listed will not affect the two companies' normal business operations, will not affect their business dealings with anyone (except the US Department of Defense); US government procurement restrictions related to the list will not affect business, and the Chinese Military Enterprise List does not restrict securities trading.

From the statements in BYD and NIO's announcements, it is easy to see that this US restriction and strike is fundamentally different from targeting Huawei. It is not a chokehold at the technical level, but rather building high walls at the market level.

Earlier, the US had already raised tariffs on China's new energy vehicles to over 100%...

In the past, the US suppressed our Huawei by conducting surgical-style precise strikes in the semiconductor field where Chinese technology was relatively weak and relied on external supply chains, but Huawei endured hardships and broke through the technological blockade.

China's new energy vehicle industry today, we have long mastered the entire industrial chain advantage from lithium mines, batteries, motors to complete vehicle manufacturing; the US essentially has no "neck" to choke.

In other words, the opponent is on the defensive, it is an offensive and defensive struggle after the shift in strength. Domestically, we have already turned the new energy vehicle industry into a trillion-level industry, and the market has already exceeded 10 million units in scale.

Therefore, this time the Chinese Military Enterprise List is more like a political gesture and trade barrier, only the means are somewhat lacking.

Its core purpose is nothing more than to restrict market access, directly ban their core defense procurement, and at the same time form a strong political signal to guide US allies and partner countries to exclude Chinese enterprises.

At the same time, AutosKline believes the US may also have the intention of curbing capital infusion, shaping the listed enterprises into investment targets "with risks", and increasing their financing costs globally.

BYD was once favored by US investors, while NIO was even the first New Force stock from China to list in the US. Both companies have a very strong demonstration effect in the electric vehicle field.

Even more ambitious is that the US attempts to define competitive rules, "generalizing security" in the new energy vehicle industry, attempting to shape China's industrial advantages in global public opinion as threats "controlled by the Chinese government, unsafe, and militarized", thereby gaining the right to define rules.

AutosKline believes the US's calculation is very loud, but the direct impact is limited. BYD and NIO have very little vehicle export to the US, this ban carries more symbolic significance than actual trade strikes.

However, there may be short-term pain at the capital level, which may trigger some passive foreign capital to sell off for risk avoidance, affecting stock prices in the short term. But the industry fundamentals are driven by technology and markets, and will be repaired in the long run.

On June 10, the reaction of the capital market was far more intense than the reaction of the enterprise's actual operations.

For NIO, the pain might be more obvious. Overall, NIO is still in the loss period, highly dependent on capital market financing to support R&D and battery swapping network construction; if financing costs rise and channels narrow, it will directly affect cash flow.

Conversely, for BYD, it is more like being bitten by a mosquito, its main business foundation is extremely deep, possessing strong free cash flow and vertical chain manufacturing capabilities; short-term fluctuations in the external capital market cannot hurt the bones and muscles.

For these two listed companies, although stock prices may fall excessively in the short term due to passive fund outflows and hedge fund short selling, as long as their cars are still selling hot, core indicators such as gross margin and cash flow remain strong, this fall will eventually attract value investors to buy the dip.

Global market differentiation risk may be the biggest threat facing China's new energy vehicle industry soon.

AutosKline believes that under US pressure, the global market may split into two. One is a trust market centered on the US, and the other is a value market centered on China. This may force companies to make an either-or choice.

This will further become a potential obstacle to the high-endization of Chinese cars, the path of entering European and American high-end markets and establishing luxury brand images will be more tortuous.

However, times have changed. Chinese cars going global is already a historical trend, unstoppable. Especially in the last two years, Chinese cars are shifting from product going global to in-depth industrial going global and ecological going global.

Such as BYD's factories in Hungary, Thailand, Brazil, are deeply bound with local interests, forming an irreversible cooperation pattern. Establishing deep cooperation joint ventures in target markets, creating local brands, becoming major local taxpayers and job creators.

Not only that, Chinese listed auto companies want to promote Chinese-led supercharging standards, battery swapping standards, and vehicle connectivity standards globally, enabling more national industrial chains to operate around Chinese standards, locking the pattern from the source.

Of course, since the other side may use resource cards, we must establish overwhelming advantages in upstream resource layout such as lithium, cobalt, nickel, and in battery recycling technologies. Let any attempt to build alternative industrial chains face cost gaps that are hard to cross.

In the rare earth field, we have already done this. Do not forget, Tesla is still in China.

Views of AutosKline:

The industrial advantage of China's new energy vehicles is systematic; it cannot be easily destroyed by a list. What really needs to be wary of is not that the US won't buy our cars, but that it is pulling allies to build a new rule set that excludes us.

The top priority is to use deeper globalization to dismantle the attempt to isolate us.

When Chinese technology, standards, factories, and interests are closely integrated with the global ecosystem, one-sided suppression is difficult to truly take effect.

Text is original content from AutosKline, content reference materials sourced from listed company announcements and industry public information (relevant companies and institutions should have the obligation to be responsible for truthfulness); some images are from the Internet, copyrighted by original owners.

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