China EVs: A security threat to Israel?

Earlier this month, the Biden Administration ordered an investigation into the national security implications of Chinese electric vehicles on the streets of the US. At present, there are no Chinese EVs in the US market, owing mainly to a high tariff imposed by President Trump and maintained by the Biden administration. But Chinese cars are becoming so competitive, that they may soon be able to afford the hefty trade barrier and still develop a US market. Thus the new investigation.

Why should this concern Israel?

In 2022 the first Chinese EVs entered the car market in Israel. And in barely two years they have taken the market by storm. It seems as if barely a week goes by without passing a new billboard advertising a sleek-looking vehicle with an unfamiliar name. Shortly after, that nameplate can be seen on highways and the streets across Israel.

In 2023, only the second year of sales, Israel was the third-largest export market for Chinese cars – an insane statistic given Israel’s size. More Chinese EVs entered the streets of Israel than the entire European Union! Chinese EVs posted spectacular year-over-year growth, as sales of brands that traditionally lead the Israeli market – Toyota, Hyundai, Mazda, Mitsubishi – all showed declines. In January 2024, more Chinese cars entered Israel’s roads than cars from any other country. This is not the result of a particular marketing campaign, or even a single dominant new car brand or model. Even the CEO of Volkswagen cars recently acknowledged that they have become structurally uncompetitive with Chinese EV competitors.

While the tax advantage of EVs in Israel is slated to diminish in the coming years, unlike the US and other markets, cars coming from China don’t face any special tariffs in Israel. And so, it seems quite likely that spectacular growth for Chinese EVs will continue – and that in this decade they will dominate the highways of Israel.

As an EV evangalist for nearly 20 years, and as the first investor in the ill-fated Israeli EV network company Better Place, I should find this to be great news. For Israel it means less oil imports, higher air quality and progress toward obligations under carbon emission treaties.

But it is important to understand that these vehicles are not just cars – they are highly sophisticated electronic devices. In many ways, they share more DNA with your smartphone than with traditional cars. They are chock full of microphones, cameras, and other sensors gathering and collecting images and data of all sorts. Teslas send this data back to servers in California. But Chinese EVs send their data to China-based data farms. And these vehicles can be seen everywhere – from the highways of Tel Aviv to the most sensitive military installations. When I visited my daughter on her base, I was asked to surrender my smartphone. But I was permitted to drive my car right in. And I parked next to a Chinese Geely Geometry. 

Surveillance is one category of concern for these vehicles. But there’s another. Since they don’t just send data – they also receive data, updating software just as we have become accustomed to expecting on our phones, these vehicles are capable of being disabled by an actor several continents away. It is not difficult to imagine a scenario in which Israel is in a hot conflict with an adversary who is aligned with China. Would it not be possible that, as part of a military campaign, that adversary would ask China to turn off its cars in Israel? That might mean one thing if they made up five percent of the car park. But it might mean something altogether different if Chinese EVs represented a third of the cars on the road in Israel.

Are these fanciful concerns? Possibly.

But the question is – is somebody who understands these potential vulnerabilities well looking closely at them as the market for Chinese EVs in Israel dramatically expands? This question seems especially urgent in light of Biden’s actions last week.

So far, I can’t find anyone who is. I asked this question widely before October 7, without a satisfactory answer. Obviously, in the wake of October 7, there are much more immediate security concerns to be addressed. However, our leaders must not neglect our long-term security concerns.

As the Biden administration has done, and before it is too late to implement effective policy measures, it is incumbent on the government of Israel to consider the security implications of Chinese electric vehicles becoming dominant in the Israeli market.