Beijing: Under the bright lights and dazzling displays at China’s annual auto show, electric car companies are pulling out all the stops to woo customers and push deeper into overseas markets.
Chinese EV gold child BYD tried to dazzle onlookers with its five-minute “flash” charging technology, even setting up a frozen barrier set at 30 degrees to show their cars can charge in sub-zero weather.
Xpeng created its own internal AI “super brain” chip that operated its autonomous driving functions. The same chip, it says, will power its model flying cars it will be mass-produced and airborne by 2027. Other companies deployed humanoid robots alongside the vehicles to help capture the emotions of live-streaming influencers on the show.
On their home turf, Chinese EV brands are locked in a price war the spiral of death. With the exception of BYD and a few others, most brands are unprofitable and collapse when government subsidies and tax breaks dry up. It has fueled a technological race to make their cars as “smart” as they can outrun their rivals while constantly reducing their profit margins.
‘We’ve reached a point where Chinese EVs have a huge market share, and so at some point you have to ask, are our vehicles critical infrastructure?’
Simeon Gilding, former director general of the federal intelligence agency Australia’s Signals Directorate
At the same time, the Iran war has given them the opportunity to increase exports – which have increased by 140 percent since last March – as drivers, including Australia, he ran to make the switch for EVs to avoid high fuel prices caused by the Strait of Hormuz congestion.
But as more Chinese EVs land on Australia’s roads, the national conversation has largely overtaken the discussion of the potential security risks of foreign companies collecting large amounts of personal data.
Simeon Gilding, former director-general of the Australian Signals Directorate, says smart car software systems provided detailed data about the health of the car and the battery and diagnostics, GPS location and devices that could be connected to the car. This posed the risk of espionage and, in the worst case scenario, the risk of sabotage if accessed by authoritarian governments, he says.
“We’ve gotten to a point where Chinese EVs have a huge market share, and so you have to ask at some point, are our vehicles critical infrastructure? Are they as critical as power stations, for example, and do they need to be regulated?” He says.
In many of China’s EV industries, companies are racing to embed AI agents in their vehicles, with the goal of turning “connected” cars into responsive machines that can carry out voice commands and perform tasks such as parking, hotel reservations and food ordering.
BYD and Geely are already cooperating with them Chinese AI juggernaut DeepSeek on their smart technologies, while other companies are partnering with Chinese tech giants Huawei and Alibaba, as well as funding their AI designs.
“There is no longer a difference between a technology company and a car company,” Nissan Motor China chief Stephen Ma told reporters on the sidelines of the show on Friday.
Moreover, China is churning out cars that are not only cheaper but technologically superior to its Asian and European rivals. Not only the world’s largest EV factory, China also controls the battery supply chain and is a major player in the development of automotive applications.
“China has the most advanced robotics and mechatronics. It has armies of engineers. And, because of that, the products coming out of China now, especially EVs, from a technical point of view are more advanced than anyone else’s – and they cost less,” says Mike Costello, a Melbourne-based automotive analyst.
Spurred on by the fuel crisis, Australians have been keen to jump on the EV bandwagon, with sales jumping at least 50 per cent in March, according to figures compiled by industry lobby groups.
Costello says BYD is the main beneficiary, estimating it is on track to deliver 30,000 vehicles to Australian shores by June which could see it become the second biggest selling brand behind Toyota by the end of the year. It’s a surprising level of penetration, considering it only started selling cars in Australia in 2022.
The use of EVs is one that Energy Minister Chris Bowen has been keen to champion as the government rushes to freeze more fuel supplies, saying EV use has helped save 15 million liters of petrol a week.
EVs are also key to the government’s climate goals, with increased use contributing to the first reduction in Australia’s transport sector emissions, outside of COVID, this year.
To put things into perspective, about one in seven cars sold in Australia in March was electric, a record but still ahead of last year’s global average of 20 per cent. Whether this is an increase fueled by the oil crisis, or a new baseline is yet to be determined.
“According to a lot of research, when someone switches to an EV, they don’t go back. So if you can switch them once you lock them in,” Costello says.
“Obviously the brands that are poised to benefit the most are the Chinese because they have a lot of product.”
Already, 80 percent of EVs sold in Australia are made in China, although this figure also includes Teslas, which are built in the company’s Shanghai factory.
As the former boss of the broadband directorate, Gilding led the agency’s assessment of China’s Huawei, which informed the Turnbull government’s landmark decision to block it from building Australia’s 5G network.
He’s careful not to draw parallels between the ban on Huawei and Chinese EVs, but says the same concern exists: that under China’s spying laws, the government can force access to private companies’ data and connections.
“Governments from small to medium-sized jurisdictions like ours must carefully consider whether the risk is high enough to justify taking (regulatory) action to annoy the Chinese and deny consumers access to cheap and good Chinese gadgets, like their EVs,” he says.
For now, the Australian government seems to have decided no. It has not followed the United States in banning the use of Chinese software and hardware in smart cars on national security grounds.
When the Biden Administration was pursuing the ban, then-US Commerce Secretary Gina Raimondo compared connected cars to “smartphones on wheels” and raised the specter of “someone in Beijing” shutting millions of cars off the road at once.
The ban, along with a 100 percent tariff on Chinese cars, has prevented China from entering the US auto market, shielding the domestic industry from competition.
The intense competition between the United States and China, fueled by years of trade wars and export controls, has blurred the lines between economic action and national security concerns, with policy dragnets sweeping one under the other’s shadow.
For its part, China has also openly acknowledged the security risks posed by connected cars and in 2021 banned Teslas from entering its military facilities over concerns that the car’s cameras could collect data.
In Australia, the public debate about the risks has played out largely in Senate Estimates hearings, where Home Affairs Minister Tony Burke’s decision to drive a Chinese EV as his personal car has come under scrutiny.
Under questioning by Liberal Senator James Paterson last year, Home Affairs officials admitted that Burke had requested a briefing on the matter from Australian security agencies and had been advised not to plug his work phone into the car as a mitigation measure.
The officials also testified that connected cars, regardless of origin, can listen in on conversations, map their movements, and record photos, but some vendors put the risk high due to their ties to foreign governments, including China.
As the relationship between China’s EV and AI industry becomes more complicated, questions about data security and regulation will undoubtedly increase. Albanon’s government has already banned DeepSeek from government-issued devices, citing an “unacceptable risk” to national security. It’s unclear if, or when, DeepSeek’s connected EVs might start hitting Australian roads. BYD did not respond to a request for comment.
Burke’s office did not directly respond to questions about whether he has sought assurances from Chinese EV companies about where and how they store their data, or whether the government considered expanding its public sector ban on DeepSeek to vehicles that use it.
In a statement, the Interior Department said the department was continuing to evaluate policy settings, and verify smart cars transmit various data in real time to manufacturers and other service providers.
It recommended buyers “carefully review the manufacturer’s privacy and data collection policies before deciding to buy a connected car” and said owners “should also disable vehicle data sharing where possible”.
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Lisa Visentin is the North Asia correspondent for The Sydney Morning Herald and The Age based in Beijing. He was previously a federal political correspondent in Canberra.Connect through X or email address.
