2024-03-01 10:45:00
U.S. President Joe Biden has ordered the U.S. Commerce Department to open an investigation into overseas-produced automotive software, arguing that Chinese technology might pose a national security risk.
He said on Thursday that China’s efforts to dominate the global auto industry pose clear security risks to the United States.
“Connected vehicles from China might collect sensitive data regarding U.S. citizens and infrastructure and transmit that data back to China,” Biden said in a statement. “These vehicles might be remotely accessed or disabled.”
Currently, few cars sold in the United States are made in China, and most have software developed by Western companies, so the immediate threat from the investigation is fairly limited. But industry analysts say Chinese auto companies are rapidly expanding globally, and if these auto companies enter the United States, potential risks may rise.
The investigation is the latest in a series of moves by the Biden administration to protect U.S. industry from what officials see as a growing threat from Chinese cyberattacks.
Auto industry executives are also growing increasingly concerned regarding the competitive threat posed by Chinese automakers whose low-priced electric vehicles are increasingly popular in Southeast Asia and Europe. Some car company CEOs have recently been pressing for tighter trade barriers to limit the expansion of Chinese automakers, especially into the U.S. market.
Currently, in addition to the regular 2.5% import tariff that is generally applicable to imported cars, Chinese-made cars also need to pay an additional 25% tariff. The Biden administration has studied raising tariffs on some Chinese-made goods, such as electric vehicles, to promote the development of the U.S. clean energy industry.
While China has not commented directly on the Biden administration’s auto plans, a Chinese Foreign Ministry spokesperson said at a regular press conference on Thursday that China firmly opposes another recent Biden effort to limit China’s access to Americans’ personal data. The move was considered discriminatory and “the United States overgeneralized the concept of national security.”
Last week, the White House revealed plans to invest more than $20 billion in maritime security, raising concerns that the use of Chinese-made cranes equipped with advanced software at many U.S. ports might pose a threat to national security.
Senior U.S. officials, including FBI Director Christopher Wray, have issued warnings regarding the threat that Chinese hackers might infiltrate critical U.S. infrastructure and pose a threat to American lives.
Biden said in a statement that Chinese automakers are trying to flood the U.S. market. He said the Commerce Department’s investigation will examine the vulnerabilities and threats that might arise if a foreign government gained access to vehicle systems or data.
Today’s cars are networked computers on wheels, using sensors, apps and cameras to collect vast amounts of information. Increased vehicle connectivity has long been a conundrum for regulators.
In July, California privacy regulators said they would examine the growing amount of data collected by smart cars. European regulators have begun investigating how the auto industry uses personal information from cars, such as location data, and in some cases forced manufacturers to update software to limit data collection.
Still, most cars sold in the U.S. use software and operating systems produced by U.S. or European technology companies, not Chinese companies, industry analysts say. That makes the threat of such software entering the United States “extremely low,” said Sam Abuelsamid, an automotive analyst at Guidehouse Insights.
Alex Oyler, director of consulting firm SBD Automotive, said that while China does produce some cameras, microcontrollers and sensors for cars sold in the United States, it is very difficult to obtain data directly from these devices and software. He said the parts were integrated into systems made primarily by non-Chinese parts suppliers such as Bosch and Harman.
“If some Chinese brands that have received investment from the Chinese government start to enter the U.S. market, by that time, there will be greater potential risks,” Abuelsamid said.
The latest investigation in the United States highlights how the auto industry is moving to center stage as President Joe Biden and former President Donald Trump seek to take a tougher stance on China ahead of this year’s presidential election.
The Biden administration has been working to reduce the U.S. auto industry’s dependence on China, including using tax breaks to boost sales of electric vehicles and pushing automakers away from Chinese suppliers.
According to data from the China Passenger Car Association (China Passenger Car Association, referred to as the Passenger Car Association), China exported approximately 5.26 million domestically produced cars overseas in 2023, becoming the world’s largest automobile exporter. Part of this export growth has come from the electric vehicle market, with China selling more than 1 million domestically produced electric vehicles overseas.
Although Chinese manufacturers have had less success in the U.S. market, partly due to high import tariffs, Chinese electric car company BYD, backed by Warren Buffett, has set its sights on North America.
BYD has been looking for a location to build a factory in Mexico and is considering exporting cars to the United States from there, The Wall Street Journal previously reported. BYD surpassed Tesla for the first time in the fourth quarter of last year and became the world’s largest electric car company by sales.
Earlier this week, a BYD executive confirmed plans to build a plant in Mexico in an interview with Yahoo Finance Live, but said BYD was not planning to build a plant in the U.S. and pointed to making electric vehicles overseas. It would be a very complicated move.
Tesla CEO Elon Musk said that Chinese car companies have achieved great success in markets outside their home country and are now the most competitive car companies in the world.
Musk said on Tesla’s earnings call in January: “If there were no trade barriers, Chinese car companies would almost easily kill most other car companies in the world.”
The Chinese government has also raised national security-related concerns regarding Western-designed cars sold to its citizens, saying they might be used to collect data and information.
In 2021, China restricted the use of Tesla vehicles by military personnel and employees of key state-owned enterprises, saying that the cameras of Tesla vehicles will continuously record images and obtain data, including when, how and where the vehicle is used.
Tesla has stated that the company’s privacy protection policy complies with Chinese laws and regulations and attaches great importance to protecting the security of user information.
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