US Drone Market Prepares for Growth as Government Bans Chinese Drone Purchases
The US drone market is set to experience a significant surge as the government imposes a ban on the purchase of Chinese drones. The National Defense Authorization Act for fiscal 2024 includes the American Security Drone Act, which prohibits the use of federal funds to buy drones made in China or certain other countries. The ban will come into effect from December 2025 and be in place until December 2028. It also restricts federal agencies from operating Chinese drones during this period, unless they have an exemption.
These measures follow similar legislation enacted in Florida last year, which prohibits state agencies from using foreign-made drones. While the laws have sparked some controversy, with critics arguing that blanket bans on China-made drones are excessive and limit budget-friendly options, US drone makers anticipate a sales boost even before the ban takes effect.
According to Jeff Thompson, founder and CEO of Utah-based drone manufacturer Red Cat, the total addressable market has increased substantially, stating, We think the total addressable market now for us after last week has gone up at least four times. He believes that the two-year notice given to government agencies provides sufficient time for a transition to drones made in the US.
The restriction on Chinese drone purchases is the latest action taken by US officials to address concerns over China’s overwhelming dominance of the global consumer drone market. DJI, a Shenzhen-based company, currently holds a 70 percent market share as the world’s largest drone maker. The US Army banned the use of DJI drones in 2017, and in 2020, the Commerce Department added DJI to its export control list, preventing US companies from selling components to the company without approval.
The recent success of small, inexpensive drones rigged with bombs in Ukraine has further reinforced the significance of small drones in modern warfare. The Pentagon initiated the Replicator program to develop thousands of low-cost drones within the US. These drones would be capable of a wide range of applications and play a crucial role in various military operations.
As the new ban on federal purchases looms, drone manufacturers expect an increase in sales as government agencies and other organizations transition to drones made in the US. Although concerns have been raised regarding the limitations this ban may impose, the heightened demand for American-made drones indicates a positive trajectory for the US drone market.
In conclusion, the US drone market is bracing itself for growth following the government’s decision to ban the purchase of Chinese drones. While the ban won’t be effective until 2025, drone manufacturers anticipate increased sales as agencies and organizations progressively switch to drones made within the US. These developments aim to reduce China’s dominance in the global drone market and enhance national security.
