The Biden administration has launched an investigation into potential U.S. national security risks of Chinese-made “connected vehicles,” just as the country’s automakers strengthen their foot hold in the international market.
The inquiry will be led by the U.S. Department of Commerce. The agency will solicit public comments over the next two months about the risks posed by vehicles linked to the internet — electric cars among them — made with technology from “countries of concern,” including China. Although it’s unclear what specific actions could result from the investigation, U.S. officials have considered restricting imports of Chinese smart cars and related components.
EVs collect massive amounts of information about their drivers and surroundings, and competition in the field has pushed automakers to create increasingly better sensors and software. Autonomous vehicles can collect up to 19 terabytes of information per hour, or as much as 5,100 TB annually.
But not all automakers collect — and protect — their data the same.
Last year, EVs made by Elon Musk’s Tesla became the second product ever to fail the Mozilla Foundation’s test for data privacy, flunking the digital non-profit’s assessments for data use, data control, track record, security, and artificial intelligence. Several products sold by General Motors and Nissan were found to gather genetic information, while Nissan and Kia were found to collect details about their drivers’ sexual activity.
China gasses up autos
“China is determined to dominate the future of the auto market, including by using unfair practices,” President Joe Biden said in a statement Thursday. “China’s policies could flood our market with its vehicles, posing risks to our national security. I’m not going to let that happen on my watch.”
Chinese auto exports have surged in recent years as the nation’s carmakers have aggressively expanded overseas. Japan — the world’s top exporter of cars since 2017 — lost its premier title to China in 2023, exporting 4.42 million vehicles to China’s 4.91 million.
China is also heavily investing in car shipping, viewing that part of the supply chain as crucial to expanding its auto industry on a global scale. Chinese EV giant BYD — which has recently overtaken Tesla in electric car sales — has even deployed its own car carrier ship.
As part of BYD’s expansion, the automaker has edged into Hungary, where it plans to build a new factory, and Brazil, where the company wants to revitalize a manufacturing hub. In fact, Hungary has become a major central part of China’s global expansion plans: It was the first European country to sign on to Beijing’s flagship infrastructure and trade program, and several of China’s largest battery makers aim to build factories there.
BYD has also expressed interest in building a new factory in Mexico, with BYD Americas CEO Stella Li telling Reuters this week it expects to pick a location for the plant by the end of 2025. At least a dozen Chinese electric-car part suppliers have recently announced new factories or added to their existing investments in Mexico, according to The Wall Street Journal.
That has some stateside auto watchdogs worried. The Alliance for American Manufacturing, a U.S. manufacturing advocacy group, argues that the country needs to close down the “commercial backdoor” left open to Chinese imports through Mexico.
Big bucks are involved, including ones that can skirt some foreign tariffs and fees. Vehicles and parts produced in Mexico can qualify for preferential treatment under the U.S.-Mexico-Canada trade agreement. They may also be eligible for the $7,500 EV tax credit implemented by the U.S.’s Inflation Reduction Act.
“The introduction of cheap Chinese autos —which are so inexpensive because they are backed with the power and funding of the Chinese government —to the American market could end up being an extinction-level event for the U.S. auto sector,” the Alliance for American Manufacturing said in a Feb. 20 report.