US Probes Security Risks in Chinese Cars, Mulls Curbs (2)

The US will investigate potential data and cybersecurity risks posed by Chinese electric vehicles and other internet-connected cars, the Commerce Department said Thursday, intending to act before their manufacturers expand into American markets.

The US isn’t yet calling for a ban of Chinese EVs but could impose some limitations on imports of the vehicles or parts, an administration official told reporters on condition of anonymity.

Potential curbs could affect a range of connected and autonomous vehicles, as well as related components from China and other foreign adversaries, the official said.

Gina Raimondo

Photographer: Ting Shen/Bloomberg

The administration is reviewing the risks “before Chinese-manufactured vehicles become widespread in the United States, and potentially threaten our privacy and our national security,” Commerce Secretary Gina Raimondo told reporters.

Earlier: Biden Looks Beyond Tariffs to Block China EVs, Connected Cars

Chinese auto companies have a very limited presence in the US because of a 27.5% tariff introduced under former President Donald Trump. The Biden administration is considering hiking those duties even higher, but officials are worried that tariffs alone won’t be enough to keep Chinese cars out of the country, Bloomberg has reported, as firms route shipments through third countries and set up shop in places like Mexico.

BYD Co. electric vehicles at the company’s showroom in Mexico City, Mexico, in Oct. 2023.

Photographer: Mariceu Erthal/Bloomberg

The European Union, meanwhile, is already working to challenge Chinese EVs, on economic rather than national security grounds.

Related: Ford Sees ‘Colossal’ Competitive Threat in Low-Cost Chinese EVs

The investigation announced Thursday fits into the administration’s broader goal of supporting the US auto industry and watching investment patterns of Chinese firms like BYD Co., the official said — but it’s specifically motivated by national security risks. There wasn’t a particular incident or finding that spurred the investigation, the official said, but rather concerns that arose out of a constant review of threats posed by China, the main US geopolitical rival.

“China is determined to dominate the future of the auto market, including by using unfair practices,” President Joe Biden said in a statement announcing the review. “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.”

WATCH: Craig Trudell reports on the US investigating potential data and cybersecurity risks posed by Chinese electric vehicles.

Source: Bloomberg

Chinese automakers have grown into some of the biggest players in the EV market, in part from widespread government subsidies and support. BYD sold more fully electric vehicles than Tesla Inc. in the fourth quarter of last year, offering a broader lineup of less expensive cars.

Beijing has its own restrictions on foreign vehicles operating in the world’s second-largest economy, including a ban on Tesla cars from certain government and military locations over national security concerns. Chinese regulations also require automobile companies to store and process troves of data within the country — a rule that could cover sensitive personal information collected by EVs, from license plates to facial characteristics.

Raimondo first outlined the administration’s security concerns in remarks at the Atlantic Council last month, one week after the Commerce Department appointed a new director of the office that will run the investigation. That office will accept public feedback over the next 60 days, the official said, but is not committed to a specific timeframe for a final policy decision.

Chinese Foreign Ministry spokeswoman Mao Ning said at a regular press briefing in Beijing on Friday that the US should “stop overstretching the concept of national security, stop its discriminatory suppression of Chinese companies, and uphold an open, fair and non-discriminatory business environment.”

Read More: Raimondo Warns Chinese EVs Pose National, Data Security Risks

The administration Wednesday unveiled a separate, broader executive order on data security across a range of industries, as first reported by Bloomberg News last month. The investigation announced Thursday is overlapping but distinct, a second administration official said, with a focus on cybersecurity in addition to data.

(Adds comment from China’s Foreign Ministry.)

To contact the reporter on this story:
Mackenzie Hawkins in Washington at mhawkins71@bloomberg.net

To contact the editors responsible for this story:
Megan Scully at mscully32@bloomberg.net

Nick Wadhams, John Harney

© 2024 Bloomberg L.P. All rights reserved. Used with permission.