Tag Archives: software of cars as a national security risk

China Against United States at the World Trade Organization

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China filed a complaint in March 2024  at the World Trade Organization over the U.S.’s Inflation Reduction Act, saying that it was discriminatory and distorted fair competition.  Under the Inflation Reduction Act, which President Biden signed into law in August 2022, consumers in the U.S. won’t be able to claim a $7,500 clean-vehicle tax credit if they buy cars containing battery components from a “foreign entity of concern” starting in 2024. The policy will extend to the minerals that go into battery components in 2025. The move was seen by industry players as a way to reduce China’s role in the U.S. EV-industry supply chain.

The definition covers any firm based in China, including subsidiaries of U.S. companies, as well as companies elsewhere that are 25% or more owned by state-backed entities from China. The rules also apply to Iran, North Korea and Russia. In February 2024, Biden ordered the U.S. Commerce Department to open an investigation into foreign-made software in cars, citing Chinese technology as a potential national-security risk. The probe could lead to restrictions on the use of certain parts in cars in the U.S.

In 2023, China became the world’s biggest car exporter, surpassing Japan and Germany, while China’s EV maker BYD overtook Tesla  to become the bestselling pure EV maker in the world in the fourth quarter of 2023.

Excerpts  from Sha Hua, China Files WTO Complaint Against U.S. Over Electric-Vehicle Subsidies, WSJ, Mar. 26, 2024

Cars as a National Security Risk: Tesla v. BYD

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In February 2024, President Biden ordered the Commerce Department to open an investigation into foreign-made software in cars, citing Chinese technology as a potential national-security risk. Chinese efforts to dominate the global auto industry posed clear security risks to the U.S. “Connected vehicles from China could collect sensitive data about our citizens and our infrastructure and send this data back to the People’s Republic of China,” Biden said in a statement. “These vehicles could be remotely accessed or disabled.”

The Biden administration has been trying to reduce the U.S. auto industry’s reliance on China, including using tax credits to boost electric-vehicle sales and pushing automakers away from Chinese suppliers. China became the world’s biggest auto exporter, shipping an estimated 5.26 million domestically made vehicles overseas, according to the China Passenger Car Association. Part of that growth came in the electric-vehicle market, where the country sold more than one million China-made EVs overseas.

Tesla Chief Executive Elon Musk has said Chinese car companies have already had much success outside of China and that they are now the “most competitive” globally.  “If there are not trade barriers established, they will pretty much demolish most other car companies in the world,” Musk said during Tesla’s earnings call in January 2024.

The Chinese government has also raised national-security concerns about Western-designed cars sold to its own citizens, saying they could be used for gathering data and information. In 2021, China restricted the use of Tesla vehicles by military staff and employees of key state-owned companies, saying the car’s cameras record images constantly and obtain data, including when, how and where the vehicles are used.

Excerpts from Gareth Vipers, Chinese Automakers Pose U.S. National-Security Threat, Biden Says, WSJ, Feb. 29, 2024