It’s no secret that the West’s increasingly coercive switch to electric vehicles (EVs) has been a gift to China. This “transition” may do relatively little to reduce global greenhouse-gas emissions, but by forcing the abandonment of a technology in which Western automakers enjoy an enormous incumbency advantage, it is offering an opportunity for Chinese automakers to break into European car markets (which they show every sign of trying to take) that have hitherto largely eluded them. U.S. automakers ought to be protected, for now, by relatively high (27.5 percent) domestic-tariff barriers, but their international sales are likely to take a hit. Moreover, because of China’s current grip on the global EV supply chain, an EV-dominated U.S. auto sector will be far more dependent on China, a hostile nation, for an unhealthily prolonged period despite its efforts to build heavily subsidized (and incomplete) substitutes at home and increased reliance on suppliers in friendlier countries.
That this will have unfavorable economic and geopolitical effects isn’t hard to see, but so far as the latter is concerned, here’s a new twist (to me, anyway), via the Financial Times:
New cars feature dozens of sensors, complex software systems and semi-autonomous capabilities. Western leaders have only just begun to consider the security implications of fleets of foreign-made, sensor-stuffed cars on their roads. Beijing, by contrast, has imposed strict data localisation rules on Tesla — China is its biggest market outside the US — and banned Tesla’s cars from sensitive locations.
Italy’s recent decision to limit a Chinese shareholder’s influence in Pirelli, a leading tyremaker, signals a change. The Italian government may be partly motivated by protectionism but it also cited Pirelli’s advanced Cyber Tyre, which collects and transmits driving data, as a rationale for curbing China’s influence in the company. Now even tyremakers are tech companies, the auto industry is unprepared for an intensified focus on security concerns about Chinese cars.
Oh.