54 Business The EconomistAugust 22nd 2020
T
he bushybeard sported by Mate Rimac,
the 32-year-old founder of a Croatian
electric-car-technology firm named after
him, long predates lockdown affectation.
He is said to have grown it to conceal
youthful features that might put off poten-
tial customers and partners among the
world’s big carmakers, who could be wary
of a company from a country with no track
record to speak of in technology or making
cars. (The infamous Soviet-era Yugo was
built in what is now Serbia.)
Whether or not the facial hair helped,
the limited run of 150 C Two electric hyper-
cars, Rimac’s second model, sold out al-
most as soon as it was unveiled in 2018, de-
spite an eye-watering price-tag of over €2m
($2.4m). Pandemic-related delays have
forced buyers to wait until 2021 for their
neck-snappingly brisk machines. Once
they do hit the road, they will showcase
technology that has attracted the attention
of—and investments from—not just luxu-
ry marques like Porsche (which owns 15.5%
of Rimac), but also mass-market ones such
as Kia and Hyundai.
Rimac’s roster of clients is said to in-
clude almost all of Europe’s big carmakers,
though most are quieter about their in-
volvement than the soft whirr of an electric
motor. Those that have made public pro-
nouncements include Aston Martin, a
posh (if struggling) British brand, and Koe-
nigsegg, a more niche Swedish one, both of
which Rimac is supplying with lightweight
battery systems for hybrid hypercars, and
Pininfarina, a new maker of fancy electric
cars from Italy. Rimac is also collaborating
with bigger carmakers such as Renault of
France and seat (part of Germany’s Volks-
wagen Group).
Indeed, for all the hypercar hype, Ri-
mac’s main business in years to come will
be supplying electric-vehicle technology.
Constructing battery packs, cooling sys-
tems and management software to give the
right combination of power for speed and
energy for range is as applicable to run-
arounds as it is to absurdly fast cars.
The firm has plenty of advantages. It is
small—with only 700 employees—and
nimble, unlike bigger suppliers that re-
quire, in Mr Rimac’s words, “five non-dis-
closure agreements and six meetings...and
months to get anything started”. Big car
firms, which have jealously kept the know-
how to build internal-combustion engines
close to their chests, can now eke out onlytiny,incremental improvements in effi-
ciency.Sinceelectric-vehicle techisinits
infancy,opportunitiesaboundforefficien-
cyleapsbycleverinterloperslikeRimac.
MrRimacseemswellonthewaytoreal-
isinghisdualaimofbecomingthebest
makerofelectrichypercarsandhelpingthe
restoftheindustrygoelectric.Buthealso
hasaneyeonlonger-termtrendsthatwill
seemobilityservicesbecomemoreimpor-
tantasprivatecar-ownershipdeclines.His
firmwillbe“partofthetransition”,hesays.
How?Hewon’tsayfornow;anotherusefor
a beardistostrokeit enigmatically. 7A small Croatian firm is making a big
name for itself in battery powerElectric vehiclesBelieve the
hypercar
ThehipsterandhishiprideT
hanks to its high quality and low
prices, Huawei’s telecoms gear is popu-
lar around the world. Not in America,
where the Chinese giant is banished over
(unsubstantiated) fears that it could be
used by spies in Beijing to eavesdrop on
Americans. But expelling Huawei from the
United States—and pressing allies like
Australia and Britain to do the same—was
not enough for the Trump administration.
It seems to want Huawei dead.
Last year the Department of Commerce
(doc) barred American firms from selling
Huawei chips made in America, which oxy-
genate swathes of the global semiconduc-
tor industry. In May the docadded a rule
banning domestic and foreign firms from
using American-built chipmaking equip-
ment to create custom-made processors
for Huawei.
On August 17th the doctightened the
noose once again—this time, many experts
think, for good. Its new rule prohibits any-one from selling any chips to Huawei, cus-
tom or not, if these were produced with
American technology. This covers practi-
cally every chipmaker in the world, includ-
ing those in China, thus closing loopholes
that the global chip industry’s high-pow-
ered lawyers have found in the earlier
edicts. The share price of MediaTek, a Tai-
wanese company which was hoping to sell
Huawei generic components, plunged by
10% on the news.
The changes take effect on August 20th.
After that, Huawei will start running down
its stockpile of chips. It has been amassing
them for months and probably has enough
to last it into 2021, reckons Dan Wang of
Gavekal Dragonomics, a research firm. But
its customers, including European mobile
operators using Huawei kit and in need of
spares, will start panicking before then.
And who would buy new network kit from
a firm which may be unable to fulfil orders?
Huawei’s options are limited. It could
sue, claiming that the doc’s actions contra-
vene America’s own laws, but its two ongo-
ing lawsuits against the American govern-
ment already look like long shots. Its
suppliers, particularly Chinese ones, may
sell it chips in breach of doc rules. Yet that
could provoke American ire—and Huawei-
like sanctions against them, too.
America’s chip firms are also in a bind.
The Semiconductor Industry Association
said it was “surprised and concerned by the
administration’s sudden shift” from an ap-
proach that balanced national security
with corporate interests. Besides lost sales
to Huawei, which bought $19bn in compo-
nents from American firms last year, tech-
nology bosses fret that their government’s
actions will drive investment away from
them to rivals in other countries.
If Beijing retaliates with a counter-
claim of jurisdiction over any product
made in China, that would devastate the
supply chains of Apple and other American
technology firms. On August 18th China’s
government accused America of “violating
international trade rules”. But it has so far
resisted striking back, perhaps counting
on Mr Trump’s defeat in November’s presi-
dential election by Joe Biden, who may take
a softer stance against China.
The doccan still issue licences to firms
that want to keep supplying Huawei with
components. American trade negotiators
may want to use this power to extract con-
cessions from China in ongoing trade talks
to boost Mr Trump’s re-election chances,
diminished by his mishandling of the
covid-19 pandemic. Given the supposed
threat Huawei poses, it may be odd to let it
live in exchange for a few extra tonnes of
soyabean sales to China. Then again, policy
inconsistency has not been an obstacle for
the Trump administration in the past.
Many Western technology firms hope that
remains the case. 7America closes the last remaining
loophole in its hounding of HuaweiSino-American tech warNo more quarter