Chinese EV tech raises security concerns for Commerce Dept – Marketplace

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Here’s a phrase that caught our attention Thursday morning: “Vehicles posing risks to our national security.” The phrase was attributed to President Biden in an announcement that the Commerce Department is starting the process of creating rules for mitigating those risks.

The issue here is vehicular technology manufactured by Chinese companies. A lot of newer vehicles can connect to the internet and transmit data, and Commerce is worried that the technology in question could end up transmitting sensitive data on drivers and passengers — or recording details of U.S. infrastructure.

It’s a reminder that national security and economics are never all that far apart.

Cars can, for sure, be national security risks.

“There’s tens of computers in cars, someday even hundreds of computers,” said Todd Moore, vice president of data security products at Thales. “And anytime you’re dealing with computers and data, that data can be maliciously intercepted. There’s always a threat.”

There have been cases where internet connected vehicles have been hacked and government officials have been spied on. But that is not the only thing going on here. Looming behind this rule about internet connected cars is the specter of Chinese electric vehicles that, to quote Elon Musk, could “demolish” competitors.

“I grew up in metro Detroit, my whole family works in the automotive space, my first job was at General Motors,” said Tu Le with consulting firm Sino Auto Insights.

He’s a big fan of U.S. autos, but he travels to China and has driven the latest Chinese EVs, of which there are many. 

“To sit in these vehicles, and drive them — that’s what scares me,” he said. “They’re competitive today.”

Chinese EVs are at least just as advanced and high quality as any U.S. competitors, Le said, but they’re a lot cheaper. This is, he said, partly the result of subsidies and partly the result of intense innovation and competition within China. 

Wendy Cutler, president of the Asia Society Policy Institute, said so far, the U.S. has been able to keep these cars out through a tariff.

“Which is now at the 27.5% rate, which seems high but given the price competitiveness of Chinese vehicles, perhaps it’s not high enough,” she said.

That defense is starting to buckle. Chinese EV companies like BYD are exploring setting up plants in Mexico to get around the tariff.

“That is setting off alarm bells in Washington,” said Emily Benson, director of the project on trade and technology at the Center for Strategic and International Studies. “It’s forced policy makers to confront a more creative set of tools.”

Creative tools like regulating cars that connect to the internet with Chinese technology. National Security, yes, but Benson said, more than just that.

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