Chinese electric vehicle makers are facing a new challenge in winning over U.S. customers: a new House bill that would limit or ban the adoption of connected cars.
The bill was introduced by Rep. Elissa Slotkin amid an escalating trade war between the U.S. and China following the Biden administration's decision to quadruple import tariffs on Chinese-made electric vehicles to 100%.
Chinese electric vehicle makers have yet to make significant inroads in the U.S., unlike in Europe, and the bill appears aimed at curbing their entry before they can flood the U.S. market with sleeker, cheaper cars.
Slotkin, a former CIA analyst and senior Pentagon official, has repeatedly warned Congress about the threat posed by Chinese-made connected cars. In a House of Representatives floor speech earlier this month, he described how the Chinese government is heavily subsidizing its domestic auto industry and selling advanced, low-cost electric vehicles equipped with lidar, radar, cameras and other sensors that collect and transmit data to Chinese authorities.
“If allowed into the U.S. market, Chinese-made connected cars would provide the Chinese government with a treasure trove of valuable information about America, including potentially gathering intelligence on U.S. military bases, critical infrastructure like our power grid and transportation systems, and even pinpointing the location of U.S. leaders,” Slotkin said in a statement Wednesday. “China holds a fast-growing share of the connected car market in Europe and Mexico, so now is the time to ensure that defenses are in place before these vehicles enter the U.S. market.”
Last week, provisions like Slotkin's that would ban Chinese-made connected cars from U.S. military bases and ban the Pentagon from purchasing Chinese lidar were included in the U.S. government's annual defense spending bill.
Slotkin's bill, called the Connected Vehicle National Security Review Act, would review not just electric vehicles but also self-driving cars if it were passed into law. A number of China-linked self-driving car companies, including WeRide and Pony.ai, currently have permits to test in California. Alphabet Inc.'s Waymo has also signed a deal with Chinese startup Zeekr to produce its own robotaxis.
Waymo did not respond to TechCrunch's request for comment on the bill.
How the Bill Affects China's EVs
When it comes to EVs, Volvo and Polestar are based in the U.S., and both are owned by China's Geely Automobile. Most Volvos are assembled in Sweden, and the next generation of Volvos for the North American market will be built at a recently opened factory in Ridgeville, South Carolina.
A Polestar spokesperson assured TechCrunch that it doesn't share any personal data of North American or European customers with China, and that because the automaker is headquartered in Sweden, it must comply with GDPR law.
In any case, the bill does not free friendly or domestically manufactured vehicles from scrutiny: If passed, the bill would give the Commerce Department the authority to review any sale, import, or other transaction involving a connected car that is “designed, manufactured, or supplied” by a company with any connection to China or any country of concern.
The bill would go a step further than previous trade-restrictive measures like tariffs and potentially ban the import of connected cars made by Chinese companies in countries like Mexico for the US, a move that could target automakers like BYD, whose CEO Stella Li said in February that the company was looking for a factory in Mexico.
The bill would also give the Commerce Department and other federal agencies clear legal authority to strengthen national security protections and prevent future administrations from rolling back those protections, but Slotkin said this is not hypothetical.
Slotkin pointed to an order by then-President Donald Trump that would have given the US the power to address security risks from TikTok, a social media platform owned by the Chinese company ByteDance. President Joe Biden signed a bill in April that would have banned TikTok unless ByteDance sold the app. Trump, who is up for re-election in November, has since reversed his previous position and even opposed efforts to force the sale.
U.S. concerns about China's data power are growing as Beijing relaxes rules governing cross-border data flows, something that Tesla is reportedly seeking to exploit to get permission to send data from its connected cars to the U.S. to train Tesla's “full self-driving” algorithms.
Slotkin's bill comes after the Biden administration launched an investigation in February into national security risks posed by connected cars and as the Commerce Department promises to issue a ruling on Chinese-made connected cars later this year.
Slotkin plans to introduce the bill after June 3, once Congress reconvenes after the Memorial Day recess.
This story has been updated to include comment from Polestar. It was originally published at 8:55 a.m. PST.