China’s electric bus and rail industries threaten national security, retired military leaders tell Congress

Bus-maker BYD blasts efforts as “xenophobic attacks exploiting ignorance and hatred”

“China’s growing dominance in the EV (electric vehicle) market threatens American competitiveness and has significant national security implications for the United States,” stated a letter to members of Congress from Securing America’s Energy Future (SAFE), a Washington, D.C., think tank.

“If China captures the EV market, the United States’ opportunity to enhance energy security by divorcing itself from an unstable global market merely swaps our reliance on one volatile oil market for a dependence on Beijing for our EVs,” the letter continued. “Moreover, the infiltration of Chinese technology into the EV sector raises substantial cybersecurity risks that may be difficult to assess and address.”

The letter was signed Aug. 26 by 14 retired generals and admirals and a former U.S. Navy Secretary. SAFE describes itself as an organization that “unites prominent military and business leaders to develop and advocate for policies that improve America’s energy security by significantly curtailing our dependence on oil and promoting responsible use of our domestic energy resources.”

BYD responded, in an Oct. 8 press release, “Special interests’ xenophobic attacks on the largest and most successful Union-made American bus company are attacks on hardworking veterans, single parents and vulnerable families seeking to better their community. These special interests are exploiting ignorance, hatred and fear on behalf of BYD’s competitors at the expense of real progress in the ongoing battle against climate change.”

The SAFE letter addressed legislation pending in the U.S. House and Senate, part of the National Defense Authorization Act, that would prevent federal transit funds from being used to purchase rail cars or buses from “Chinese-owned, controlled or subsidized companies.”

“China has made capturing the electric vehicle sector a central part of its Made in China 2025 strategy, through which China seeks to gain strategic advantages over global-great-power rivals dominating nascent critical industries,” the SAFE letter said. “China is pursuing this goal by providing aggressive government subsidies to Chinese corporations to lower prices to win business, undermining principles of fair competition and competitive markets.”

In an opinion piece published on the website The Hill, three of the letter signatories wrote, “China has spent years and approximately $60 billion subsidizing its domestic companies in order to capture overseas markets while the EV industry is still developing, helping Chinese companies to submit bids for major contracts that are as much as $20 million cheaper than its North American competitors.

“If we allow transit agencies to use federal funds to buy Chinese electric buses, then these companies are in effect being subsidized twice.”

A study promoted by SAFE estimated the Chinese government’s subsidies to BYD at $328 million in 2018.

The Alliance for American Manufacturing (AAM) also urged Congress to halt federal funding for purchases of Chinese rail cars and buses.

“BYD pitches itself as an innovative, privately owned electric vehicle maker, but… several Chinese state-owned investment funds hold equity interest in the company, signaling to investors in China this company has the government’s backing. Members of the corporate leadership have ties to the government or Communist party,” AAM argued in a video posted online Oct. 3.

The Hill column predicted that the global electric vehicle market could be worth $420 billion by 2025.

“China is alive to the opportunity that the manufacture and sale of electric buses will have on the wider EV market and has wasted little time in scaling up its manufacturing and market ambitions. There are already 421,000 electric buses in China compared to just 300 in the United States,” the column stated.

The U.S. Office of Management and Budget also has asked Congress to ban federal funding for Chinese transit vehicles. “It is critical that such prohibitions cover procurement of all rolling stock transit vehicles to ensure the Nation’s economic and national security and to prevent the use of Federal dollars to support foreign state-controlled enterprises,” OMB wrote in June.

According to the Washington news site Roll Call, the government-owned Chinese Railway Rolling Stock Corp. has won contracts worth $2.7 billion to build subway and commuter rail cars in Boston, Philadelphia, Chicago and Los Angeles.

Also, Roll Call reported, “A Chinese electric bus manufacturer, Build Your Dreams, or BYD, meanwhile, has delivered 350 buses in the U.S. since 2014 to cities such as Indianapolis; Columbia, Missouri; and Wenatchee, Washington. BYD is privately held, but those pushing for the Senate measure say the company benefits from substantial Chinese subsidies.”

Any company building electric vehicles in China would be eligible for the same subsidies given BYD, countered Frank Girardot, director of communications for BYD North America. He told Roll Call, “The fact is Tesla gets the same subsidies in China for building electric vehicles there, and Tesla is nothing if not an American company.”

He said the company’s factory in Lancaster, California, employs 800 union members and complies with federal “Buy America” requirements that regulate federal transit subsidies.

Roll Call noted that BYD has a powerful political ally in Congress. Its Lancaster facility is located in the district of U.S. House Minority Leader Kevin McCarthy.

China is leading the world in construction of electric vehicle battery factories, an expert told the U.S. Senate in February. Simon Moores said his company, Benchmark Mineral Intelligence, “is now tracking 70 lithium ion battery megafactories under construction across four continents, 46 of which are based in China with only five currently planned for the U.S. Only one of these battery megafactories is American-owned (Gigafactory 1, Tesla).”

Electric buses will be critical in establishing market shares for electric vehicles, argued a column in The Fuse, a newsletter produced by SAFE. “As battery costs fall, government finance programs defraying upfront purchase costs in tandem with stricter emissions goals mean electric buses are most likely to be the beach head for wider EV deployment.”

The BYD press release argued, “BYD is a privately-held and publicly-traded company. It is traded on the free Hong Kong stock exchange and all corporate financial data is a matter of public record.

“That’s why half a dozen leading environmental groups—the Environmental Defense Fund, League of Conservation Voters, Friends of the Earth, Environmental Working Group, Environment America, and U.S. PIRG—support BYD’s market-leading efforts to develop clean air solutions for our nation’s transportation agencies.”

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