Chinese EVs have entered center stage in US-China tensions

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Chinese EVs have entered center stage in US-China tensions

By Zeyi Yang | MIT Technology Review | March 6, 2024

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So far, electric vehicles have mostly been discussed in the US through a scientific, economic, or environmental lens. But all of a sudden, they have become highly political.  Last Thursday, the Biden administration announced it would investigate the security risks posed by Chinese-made smart cars, which could “collect sensitive data about our citizens and our infrastructure and send this data back to the People’s Republic of China,” the statement from White House claims.

While many other technologies from China have been scrutinized because of security concerns, EVs have largely avoided that sort of attention until now. After all, they represent a technology that will greatly help the world transition to clean and renewable energy, and people have greeted its rapid growth in China with praise.

But US-China relations have been at a low point since the Trump years and the pandemic, and it seems like only a matter of time before any trade or interaction between the two countries falls under security scrutiny. Now it’s EVs’ turn.  The White House has made clear that there are two motivations behind the investigation: the economy and security.  Even though the statement didn’t explicitly mention EVs, it’s undeniable as Chinese companies like BYD make quality EVs at affordable prices, making them increasingly competitive in international markets. So it’s no surprise Chinese EVs are seen as a major economic threat that needs to be addressed.  In fact, it’s one of the few issues everyone seems to agree on in this election cycle. 

To many experts, this argument is a lot less supported by reality. When TikTok and Huawei were subject to similar concerns, it was because their products were widely used in the US. But the majority of Chinese-made cars are running inside China. There are barely any Chinese cars being sold in the US today, let alone the latest models. That makes the White House’s position look slightly bizarre. 

Having watched these other technologies come into the geopolitical crossfire from afar, Chinese EV companies were mostly prepared for what was announced last week.  Recently, BYD Americas’ CEO said in an interview that its new planned factory in Mexico will serve the domestic market rather than exporting to the US.  Similarly NIO, another Chinese car company, removed the US from its initial plan of entering 25 markets by 2025. These are all signs that Chinese EV companies will shy away from the US market for a while, at least until the political animosity goes away. Being unable to sell in the world’s second-largest auto market is obviously not good news, but they have a lot of potential customers in Europe, Latin America, and Southeast Asia.

3 key takeaways from the article

1. So far, electric vehicles have mostly been discussed in the US through a scientific, economic, or environmental lens. But all of a sudden, they have become highly political.  Last Thursday, the Biden administration announced it would investigate the security risks posed by Chinese-made smart cars.
2. The White House has made clear that there are two motivations behind the investigation: the economy and security.  Even though the statement didn’t explicitly mention EVs, it’s undeniable as Chinese companies like BYD make quality EVs at affordable prices, making them increasingly competitive in international markets.
3. To many experts, this argument is a lot less supported by reality. There are barely any Chinese cars being sold in the US today, let alone the latest models. Having watched these other technologies come into the geopolitical crossfire from afar, Chinese EV companies were mostly prepared for what was announced last week. 

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Topics:  China, USA, Auto Industry, Electric Vehicles