Industry group warns of Chinese connected vehicles

The U.S. Commerce Department’s 60-day window for public comments regarding the national security concerns of connected vehicles closed this week, with a leading transportation group issuing a grave warning about potential threats to the U.S. automotive industry. 

The threats surround the possibility of foreign adversaries — particularly China — taking advantage of the technology in connected vehicles to steal sensitive user data information and even stage cyberattacks. 

The Department of Transportation (DOT) lists connected vehicle technologies as "applications, or systems that use V2X communications to address safety, system efficiency, or mobility on our roadways."

Additionally, the technology uses "data from short-range communication broadcasts and peer-to-peer exchanges within approximately 300 meters to ‘sense’ what other travelers are doing and identify potential hazards," according to the DOT. 

That information, however, could be in jeopardy due to sophisticated Chinese components included in the vehicles from the automotive supply chain. 

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Consequently, the Biden administration in February opened an investigation to address the national security risks from connected automobiles that incorporate technology from China and other possible adversaries. 

In a statement, the White House pointed out that the large amounts of sensitive data in connected vehicles — including on cameras and sensors — posed significant risks.  

"Connected vehicles collect large amounts of sensitive data on their drivers and passengers; regularly use their cameras and sensors to record detailed information on U.S. infrastructure; interact directly with critical infrastructure; and can be piloted or disabled remotely," the statement read. 

"Connected autos that rely on technology and data systems from countries of concern, including the People’s Republic of China, could be exploited in ways that threaten national security. China has imposed wide-ranging restrictions on American autos and other foreign vehicles operating on their roads," the White House added. 

Now, a leading industry group, named Securing America’s Future Energy (SAFE), has made public their comments that the Commerce Department sought on the issue, describing the litany of risks to U.S. national security that the technology poses. 

"Foreign adversaries are cornering and leveraging key supply chains to geopolitical and economic ends — with outcomes that could range from cyberattacks on U.S. soil to the gathering of sensitive information and strategic intelligence," said Avery Ash, the Executive Director of SAFE’s Coalition for ReImagine Mobility (ReMo). 

"The scope, scale, and urgency of this national security risk comes at the same time the automotive industry is experiencing a transformational shift. The focus should be on expediting the integration of these technologies to ensure their integrity while safeguarding them from vulnerabilities and disruptions from foreign adversaries," Ash continued. 

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In SAFE’s ReMo comments for the Commerce Department, they say that Chinese firms "dominate the production" of many essential components for the vehicles. 

ReMo goes on to say that China typically enters the American automotive market by acting as a supplier for parts manufactured in Canada and Mexico, instead of directly shipping fully assembled vehicles. 

As a result, in 2023, "Mexico was the largest auto parts supplier to the United States, with China ranking third, but China was also the second-largest auto parts supplier for Mexico," according to SAFE. 

Through this process, China could theoretically bypass any tariffs while gaining benefits from the United States — Mexico — Canada (USMCA) free trade agreement from 2020. 

Asked about the tariffs, Ash told FOX Business that they have been generally effective but more needs to be done.

"The 27.5% tariffs the U.S. has on Chinese cars has kept their market share near zero even as imports to Europe have skyrocketed. With reports the Chinese automaker BYD is considering opening a plant in Mexico, many have speculated that would be part of an effort to enter the U.S. market and circumvent U.S. tariffs," Ash stated. 

"This Commerce Department investigation starts the process of adding another tool to the toolkit that this administration or a future administration could use to prevent that end-around under national security grounds without undermining the USMCA," the ReMo Executive Director said. 

Elsewhere, the Commerce Department’s investigation has caught the eye of members of Congress, with lawmakers on both sides of the aisle expressing their support to crack down on the technology. 

"Chinese automakers have already deployed their autonomous vehicles here and are using them for surveillance and to collect data, meanwhile banning American vehicles on their own streets," Rep. Debbie Dingell, D-MI, wrote in a statement when the investigation was announced. 

"America has an opportunity to herald this new era of mobility and maintain our leadership at the forefront of the global auto industry, and we must do so in a way that protects Americans’ privacy and safety and strengthens our national security," Dingell added.

Meantime, the House Select Committee on Strategic Competition between the United States and the Chinese Communist Party has also taken an interest in the topic, as it seeks to further limit China from stealing American information. 

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The Committee, which has already tackled issues such as alleged Chinese espionage cranes, and the embattled application TikTok, notes that connected vehicles is yet another way for China to prey on U.S. vulnerabilities. 

"Allowing Chinese internet-connected vehicles on U.S. roadways is an invitation for Xi Jinping’s global surveillance state to join American drivers in the passenger seat," Select Committee Chairman John Moolenaar, R-MI, told FOX Business.

"We need a level playing field: if China prohibits American vehicles from Chinese streets, then China-based automakers should not have an open road in the United States," the Chairman concluded.