Biden calls Chinese electric vehicles a security threat
President Biden took steps on Thursday to ban Chinese electric vehicles from entering the US car market. He said internet-connected cars and trucks from China posed national security risks because their operating systems could send sensitive information to Beijing.
The immediate action was the opening of a Commerce Department investigation into security threats, which could lead to new regulations or restrictions on Chinese vehicles.
But administration officials made clear that this was the first step in what could be a broad range of policy responses intended to prevent cheap Chinese electric vehicles — whether manufactured in China or assembled by Chinese companies in countries like Mexico — from flooding the U.S. market and potentially pushing domestic automakers out of business.
China has rapidly scaled up electric vehicle production in recent years, putting it on a collision course with Mr. Biden’s industrial policy efforts aimed at helping U.S. automakers dominate that market at home and abroad. Some of the smaller cars sell for less than $11,000 each – significantly less than a comparable American-made electric vehicle.
The administration’s actions on Thursday come as Biden’s likely opponent in November, former President Donald J. Trump, criticizes him for pushing automakers toward electric vehicles — and as each of the candidates tries harder against China.
The measures stemmed from talks with Detroit automakers, auto unions and EV giant Tesla, which was recently supplanted by Chinese company BYD as the world’s largest seller of electric cars.
“China is determined to dominate the future of the auto market, including through unfair practices,” Biden said in a statement accompanying the announcement. “China’s policies could flood our market with its vehicles, which could pose risks to our national security. I will not let that happen under my watch.”
Thursday’s action did not immediately impose new barriers on Chinese electric vehicles, which already face high tariffs and have not yet penetrated the growing U.S. market for clean energy cars.
At Mr. Biden’s direction, the Commerce Department has launched an investigation into the threat from technology embedded in Chinese electric vehicles. That includes Chinese-made versions of common car software, which government officials said could track where Americans drove and charged their vehicles, or even what music or podcasts they listened to on the road.
Administration officials noted that U.S. automakers selling vehicles to customers in China were essentially forced by Chinese officials to use Chinese software in their vehicles.
The announcement was the latest example of Biden’s moves to increase technology curbs on China, continuing a bipartisan trend toward more hostile trade ties between the world’s largest economies. The Commerce Department investigation ordered by Mr. Biden marks the first use of a new authority established by executive order issued in 2019 by Mr. Trump.
Biden officials said the investigation could result in new U.S. restrictions on vehicles that relied on software from China.
Administration officials are looking at other steps to further hamper imports of Chinese vehicles, which have already boomed in European markets due to low prices driven in part by significantly lower labor costs. That could include raising a 25 percent tariff on Chinese vehicles.
“We will certainly continue to look at a range of policies to ensure that our automakers and our autoworkers remain the most competitive in the world,” Lael Brainard, chairman of the President’s National Economic Council, said in an interview.
The Treasury Department has already proposed rules aimed at limiting China’s ability to supply materials for cars and trucks that qualify for a $7,500 electric vehicle tax credit included in Mr. Biden’s signed climate bill.
The Commerce Department investigation announced Thursday emerged from a series of conversations that administration officials had with automakers last fall after the settlement of a United Automobile Workers strike in which Mr. Biden stood with the union and joined a picket line. The automakers told government officials about the restrictions they faced in selling in China, including on software.
Biden aides began to worry about what might happen if the United States did not impose similar restrictions on Chinese software, which administration officials say only a handful of cars drive in America today.
China is “flooding foreign markets with their cars,” Ms. Brainard said. “Many of those vehicles may be able to continuously connect to our infrastructure, to the drivers’ smartphones, to nearby cars. So they collect an enormous amount of information.”
In a briefing call with reporters, Gina M. Raimondo, the Commerce Secretary, said it was “frightening to think about the cyber risks and espionage risks that these pose.”
Ms. Brainard emphasized that Thursday’s action was limited to software issues. But she added, “It is also very important to our economic security and our national security to have a strong and vibrant American auto industry, with American auto workers.”