Security Concerns Drive U.S. Debate on Regulating Chinese Electric Cars

The U.S. government has hinted at possibly regulating Chinese electric vehicles due to “security risks.” After the European Union (EU) investigated subsidies for Chinese electric cars last year, the U.S. also shows indications of regulatory movement toward Chinese electric vehicles.

According to the South China Morning Post (SCMP), U.S. Commerce Secretary Gina Raimondo, when questioned at a think tank Atlantic Council seminar on the 30th of last month (local time), stated, “Electric and self-driving cars collect a tremendous amount of information, such as the driver and vehicle locations and the situations around the vehicles,” and rhetorically asked, “Do we want this information to be sent to China?”

Raimondo’s mention of Chinese electric cars in connection with security comes as the Biden administration is considering imposing heavy import tariffs on some Chinese goods, including electric vehicles.

SCMP said Raimondo pointed out the potential for geopolitical risks from the Chinese electric car industry, which was first hit by the EU’s anti-subsidy investigation in October last year.

Thanks to domestic demand for electric cars, China has risen to the world’s largest electric car market. As a result, additional demand is expected in industries related to electric vehicles, such as batteries. However, China’s demand in regions outside its own is unpredictable.

Experts point out that the situation is entirely different in the U.S. market. Heiron Lim, a researcher at Moody’s Analytics, diagnosed that “Chinese auto companies are lagging in the U.S. market compared to American and Korean manufacturers who have core customers in Europe and Asia.”

He mentioned that Mexico, which tried to attract investment from Chinese auto companies, received a request to “be careful” from the U.S., explaining the reason as “limiting China’s next-generation growth areas.”

There are opposing views as well. Wang Zichen, a researcher at the China Globalization Think Tank, said, “Last year, China’s total exports were 23.77 trillion yuan (USD 3.3 billion), but the export volume of three new products such as electric cars and batteries promoted by China does not even reach 5% of the total.”

Chinese state-run media disapproved, claiming Raimondo’s remarks showed “anti-market regulatory addiction” and “will cause a backlash.” Global Times explained, “If the U.S. truly wants to compete and win, it should do so in a fair way.”