Combining cutting-edge software with high-quality, mass-produced machinery, the U.S. automotive industry is the backbone of the country’s advanced manufacturing sector. But Covid-19 has revealed a dependence on Chinese supply chains that threatens the future of the high-skilled companies and workers that make American vehicles, from light-duty cars to heavy-duty trucks.
China is consolidating control of emerging technologies of immense strategic and economic importance—including electric vehicles (EVs), autonomous vehicles (AVs) and 5G—subsidizing domestic firms to the point that American companies are competing against the Chinese state, rather than Chinese companies.
Ceding leadership in these technologies seriously threatens our national security and privacy. The U.S. must take urgent steps to counter Beijing’s commanding positions in the technologies that will define our economy for decades to come.
Beyond the risks to our auto industry—a sector that forms the advanced manufacturing backbone of the U.S. economy, supporting nearly 10 million jobs nationwide—is the threat to the industry’s ability to support national production surges in moments of crisis: it built tanks, bombers and trucks as the “Arsenal for Democracy” during World War II, and has made ventilators and PPE as the “Arsenal for Health” during the pandemic.
The stakes are high. China exerts vast control over virtually every aspect of the transportation technology supply chain, including 70% of the world’s lithium supply, 83% of the anodes and 61% of the cathodes used in batteries, 75% of the permanent magnet production needed for motors, and ownership of the production of rare earths needed for U.S. weapons systems and EVs.
China is also home to 107 of the 142 lithium-ion battery megafactories already built or under construction worldwide. Just nine will be in the U.S.
Tomorrow’s intelligent transportation technologies will be built on 5G connectivity, and Beijing is moving swiftly to lead its worldwide rollout through companies like Huawei—despite U.S. intelligence community cyber-espionage concerns. By late 2020, China is projected to have more than 500,000 5G sites. As of 2018, there were fewer than 30,000 in the U.S.
This dominance has been years in the making. Beijing has flouted many global trade norms since joining the World Trade Organization in 2000, engaging in forced technology transfer, reverse engineering, generous subsidies, IP theft and tariffs to control supply chains. The country’s Made in China 2025 strategy—a blueprint for greater global authority through ownership of critical emerging industries including EVs, artificial intelligence, and 5G—was published for all the world to read.
Four Critical Responses
For the sake of U.S. economic and national security, we must respond now both at the congressional level and through international action.
This can be achieved in four critical ways.
First, we must support the advanced fuel vehicle market and domestic manufacturing. The light-duty EV tax credit requires reform, and similar incentives must be established for medium- and heavy-duty EVs.
Federal programs must be renewed and expanded to help the industry retool for the future. This is not just a battle for the entire supply chain from “minerals to markets”; much of it starts by supporting the U.S. EV market, which trails both China and Europe.
Second, we must develop a more diversified critical minerals supply chain to be less dependent on China, prioritizing stringent environmental and transparency standards in return for reasonable mining and permitting processes, and diversifying supplies of minerals unavailable domestically.
Third, we must advance connected and autonomous transportation technology, modernizing automobile regulations to preserve and strengthen America’s global AV leadership. Manufacturers should be able to put up to 100,000 AVs on the road, provided they meet strict federal standards. A regulatory road map must be set to provide greater certainty for their development and deployment. Critical spectrum space must also be preserved for vehicle connectivity.
Finally, we must combat predatory economic practices, in multilateral alliances with our economic and security partners at international institutions. We must lead in defining international standards, so that Beijing does not set the rules of the road in its favor in those institutions.
With U.S. national security, economic sovereignty and industrial base at stake, bipartisan action is imperative to strengthen our nation’s automotive and transportation sectors, bolster our energy security and safeguard our economic future.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Debbie Dingell is the U.S. Representative from the 12th Congressional District of Michigan.
Admiral Dennis Blair is the former director of national intelligence and commander in chief, U.S. Pacific Command. He is the chairman of Securing America’s Future Energy (SAFE), and a member of SAFE’s Energy Security Leadership Council.