President Joe Biden has ordered a probe into the potential national security risks posed by “connected vehicles” made in China. In a move that marks the latest escalation in a trade war between the two nations, Biden’s administration is tasking the U.S. Commerce Department with investigating whether Chinese-manufactured connected vehicles threaten national security.
According to a statement from President Biden, these vehicles are connected to mobile phones, navigation systems and critical national infrastructure. This gives the automobiles the ability to “collect sensitive data” and beam it back to Beijing, Biden said, and allows potentially bad players to access or disable the vehicles remotely.
Although China struggled to compete with the Unites States in the traditional auto industry, the East Asian nation has the largest electric vehicle industry globally. Massive government subsidies have allowed Chinese EV makers to lower their production costs and sell their electric cars more cheaply compared to Western automakers.
European Union officials have launched a probe into cheap Chinese electric cars to determine if the Chinese government is using subsidies to artificially lower prices and cut European carmakers out of the market. A Chinese automaker also surpassed Tesla as the top EV maker on the globe in the last quarter of 2023 after the Texas-based EV maker spent more than a decade at the top of the global EV industry.
Authorities in the U.S. and the European Union are scrambling to bridge the ever-widening gap between their EV markets and China. American leaders are especially keen on supporting the development of a domestic electric-vehicle industry that could eventually rival China on the global level.
Morgan Bazilian, director of the Colorado School of the Mines’ Payne Institute, says the recent announcement by the Biden administration seems to be part of a broader trade war between China and the U.S. He notes that while there are real security threats associated with Chinese-made connected vehicles, the recent decision seems to be an economic one.
It is also a testament to how technology has become a dominant factor in U.S.-China relations and could be a precursor to the type of policies the U.S. government uses to target Chinese-made connected vehicles. Biden noted that China is hell-bent on dominating the automotive market and isn’t afraid of using “unfair practices.”
Biden said that such unfair practices and policies could potentially flood the American market with Chinese electric cars and threaten the country’s national security. The outcome of this probe could directly impact entities such as NIO Inc. (NYSE: NIO) because any restrictions that the U.S. imposes could hamper Chinese EV makers looking to dominate the U.S. and global auto market.
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