National Security Concerns Prompt US Investigation into Potential Data Risks Posed by Chinese Cars

The US Commerce Department is launching an investigation into Chinese vehicle imports, particularly focusing on concerns surrounding “connected” car technology. The probe is motivated by worries that these vehicles collect sensitive data on drivers and passengers, utilizing cameras and sensors that record detailed information on US infrastructure. The investigation will explore potential national security risks, including the remote piloting or disabling of vehicles, and assess the impact on autonomous vehicles. This move reflects heightened scrutiny over the security implications of foreign-connected technologies in the automotive industry.

President Joe Biden expressed concerns about the potential flooding of the US market with Chinese vehicles, citing risks to national security. The White House emphasized that it’s too early to specify the actions to be taken and clarified that no decision has been made regarding a potential ban or restrictions on connected Chinese vehicles. Officials mentioned that the US government possesses broad legal powers, indicating the possibility of impactful actions. This move is characterized as an unprecedented effort to prevent vehicles from countries of concern, like China, from undermining national security on US roads. The administration is taking preemptive action, considering the limited number of Chinese-made light-duty vehicles currently imported into the United States. Commerce Secretary Gina Raimondo highlighted the aim to address potential threats to privacy and national security before they become widespread.Chinese electric vehicle (EV) makers have been focusing on Southeast Asia, the Middle East, and Europe as their major export markets. BYD, recognized as the world’s largest EV maker by sales, has consistently stated that it has no intention of selling its cars in the US market. However, recent developments suggest that BYD is exploring opportunities in Mexico and is actively searching for a location to establish a plant for car production dedicated to the Mexican market. The Chinese foreign ministry has not provided an immediate response to requests for comments on this matter.

Cui Dongshu, the Secretary General of China Passenger Car Association, expressed concerns about the fairness of targeting cars from a specific country and imposing exclusive restrictions on them, particularly those equipped with intelligent sensors. Simultaneously, the Biden administration is contemplating the imposition of new tariffs on Chinese-made vehicles. There is also growing pressure to restrict Chinese electric vehicle imports from Mexico. The Chinese Embassy in Washington has criticized these proposals, urging the administration to refrain from exaggerating the “China threat” theory and unwarrantedly suppressing Chinese companies. Washington has enacted laws excluding companies and consumers from benefiting from tax credits and subsidies if their supply chains involve materials from countries deemed a “Foreign Entity of Concern” (FEOC).

In December, China argued that the restrictions imposed by the U.S. on Chinese electric vehicles (EVs) violated international trade rules and would disrupt global supply chains. This is particularly significant as China dominates the EV battery supply chain, prompting the industry to seek ways to establish a China-free supply chain. In November, bipartisan U.S. lawmakers raised concerns about Chinese companies collecting and handling sensitive data during autonomous vehicle testing in the United States. The U.S. Commerce Department will seek comments for 60 days and then consider drafting regulations to address these concerns. The investigation will also inquire about details regarding current U.S.-assembled vehicles, including where automakers license software. The White House emphasized that China imposes significant restrictions on U.S. and other foreign autos operating in China, questioning why connected vehicles from China should be allowed to operate in the U.S. without safeguards. In recent years, China has strengthened its oversight of data management, requiring industries to apply for permission before transferring data abroad. In May, the country tightened data rules for the auto industry, proposing a ban on smart vehicles in China from directly transferring data abroad, encouraging the use of domestic cloud services instead.