The current administration ordered the Commerce Department to open an investigation into foreign-made software in cars, citing Chinese technology as a potential national security risk. A White House spokesman stated that Chinese efforts to dominate the global auto industry posed clear security risks to the US. “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, and these vehicles could be remotely accessed or disabled.” The investigation could lead to restrictions on using certain parts in cars in the US.
Few US-sold cars are currently made in China, and most have software developed by Western firms, limiting the immediate threat. Chinese car companies are moving swiftly to expand globally, and if they gain entry into the US, the potential risk could be higher, industry analysts say. The probe is the latest in a series of moves by the current administration to protect US industry against what officials see as the growing threat of Chinese cyberattacks.
Within the auto industry, car executives are also growing increasingly nervous about the competitive threat posed by some Chinese car companies, whose lower-priced electric cars are gaining popularity in Southeast Asia and Europe. Some automotive CEOs have recently pressed for stiffer trade barriers to limit their expansion, particularly to the US. Chinese-built cars are subject to an extra 25% tariff on top of the regular 2.5% import duty that generally applies to imported vehicles. The current administration has explored raising the tariff on some Chinese-made goods, including electric cars, to bolster the US clean-energy industry.
While China has not commented directly on Biden’s auto plan, a spokeswoman for its Foreign Ministry said at a recent briefing that it rejected as discriminatory another recent move by the president to limit China’s access to the personal data of Americans by saying the U.S. “overstretches the concept of national security.” The White House revealed plans to invest more than $20 billion in maritime security, raising concerns that China-built cranes with advanced software at many of the nation’s ports posed a potential national security risk.
There has been a surge of warnings from top US officials, including Federal Bureau of Investigation Director Christopher Wray, regarding the potential threat to American lives posed by the infiltration of the nation’s critical infrastructure by Chinese hackers. Chinese automakers were seeking to flood the US market. The Commerce Department probe will explore the vulnerabilities and threats that could arise if a foreign government gained access to vehicles’ systems or data. Modern cars are effectively connected computers on wheels, collecting vast information using sensors, apps, and cameras. The increased connectivity of cars has long posed a difficulty for regulators.
In July 2023, California’s privacy regulator said it would examine the growing amalgamation of data collected by smart vehicles. Regulators in Europe have opened investigations into how the auto industry uses personal information from cars, such as location data, and in some cases, forced manufacturers to update software to limit data collection. Most vehicles sold in the US use software and operating systems made by tech firms based in the US or Europe, not China, industry analysts say. That makes the threat of this kind of software making its way into the US “extremely low,” said Sam Abuelsamid, an automotive analyst at Guidehouse Insights.
While China does make some cameras, microcontrollers, and sensors for US-sold vehicles, it would be tough to get data from them directly, said Alex Oyler, a director at consulting firm SBD Automotive. And those parts are integrated into systems that are primarily made by non-Chinese parts suppliers, such as Bosch and Harman, he said. “If and when some of the Chinese brands that have investment from China’s government start to move into the US market, that’s when there is a greater potential risk,” Abuelsamid said.
The new US probe underscores how the auto industry is moving to center stage as both President Biden and former President Donald Trump seek to take a tougher stance against China ahead of this year's presidential election. The Biden administration has been trying to reduce the US auto industry’s reliance on China, including using tax credits to boost electric vehicle sales and pushing automakers away from Chinese suppliers.
Last year, 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. While Chinese manufacturers have had limited success in the US due partly to hefty import tariffs, EV automaker BYD, backed by Warren Buffett, has set its sights on North America.
The company, which in the fourth quarter overtook Tesla for the first time as the world’s largest EV seller, has been scouting locations in Mexico for a factory from which it would consider exporting cars to the US, The Wall Street Journal has reported. In an interview with Yahoo Finance Live, a senior BYD executive confirmed the Mexico factory plans but said it was not planning to come to the US, noting that such a move would be “very complicated” regarding an EV.
Tesla Chief Executive Elon Musk said Chinese car companies have already had much success outside of China and are now the “most competitive” globally. “If trade barriers are not established, they will pretty much demolish most other car companies in the world,” Musk said during Tesla’s earnings call in January.
The Chinese government has also raised national security concerns about Western-designed cars sold to its 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. Tesla has said its privacy protection policy complies with Chinese laws and regulations and attaches “great importance” to securing user information.
This article is presented at no charge for educational and informational purposes only.
Red Sky Alliance is a Cyber Threat Analysis and Intelligence Service organization. For questions, comments or assistance, please get in touch with the office directly at 1-844-492-7225 or feedback@redskyalliance.com
- Reporting: https://www. redskyalliance. org/
- Website: https://www. redskyalliance. com/
- LinkedIn: https://www. LinkedIn. com/company/64265941
Weekly Cyber Intelligence Briefings:
REDSHORTS - Weekly Cyber Intelligence Briefings
https://attendee.gotowebinar.com/register/5504229295967742989
Comments