EV Investment Could Open a New Pathway for U.S.-China Relations

A recent news report suggests that U.S. and Chinese negotiators are discussing a list of projects in non-sensitive sectors that could form the first round of Chinese investment in the U.S. under the new bilateral Board of Investment. Options reportedly under consideration include electric vehicles (EV), battery storage, and power equipment and infrastructure, among other as-yet-unspecified areas. EV investment could become an early test of the Board, and this potential opening deserves serious consideration.

The EV case is a particularly consequential test because American trade barriers have largely kept Chinese EV out of the American market, with national security restrictions further limiting their prospects. If the Board of Investment can negotiate viable investment arrangements in this sector, it could open a substantial new avenue for economic and technological cooperation where direct trade has faced formidable obstacles. Structured joint ventures could offer a practical solution by combining the strength of both countries and addressing their respective concerns. Such partnerships could strengthen American industrial capabilities while creating lasting ties in production and product development. Their value could also extend beyond the automotive industry, giving both countries stronger commercial interests in a more stable bilateral relationship.

Beyond its significance for bilateral relations, EV investment could also deliver substantial benefits to the U.S. In September, President Trump had just expressed openness to Chinese automakers building cars in the U.S., provided they employ American workers.

As the American automotive industry struggles to maintain competitiveness in rapidly changing global markets, Chinese investment could bring capital, established production methods, and access to technologies across the supply chain that American manufacturers are still working to scale. These resources could strengthen the U.S. automotive industry while accelerating the development of more affordable and technologically advanced vehicles.

Electrification is also increasingly connected to the next stage of automotive development. EV is at the forefront of the shift toward smart vehicles, supporting advances in automated driving and integrated vehicle control. American strengths in AI provide an important foundation, but translating them into competitive products also requires capable vehicle and battery manufacturing. Cooperation with Chinese companies could help close that gap and shorten the process of acquiring manufacturing experience.

Wider EV adoption would contribute to lower transportation emissions as well. Although climate policy carries less political weight in the current administration, these benefits would remain significant alongside the industrial and consumer gains.

American concerns about Chinese EV nevertheless deserve a substantive response. American opponents of Chinese EV imports and investment argue that connected vehicles collect information and rely on software that can be accessed or updated remotely, potentially creating cybersecurity and national security risks. They also warn that strong competition from Chinese manufacturers could threaten the market position and employment base of existing American producers. Dismissing these concerns would weaken the case for cooperation.

American policymakers and industry groups have invoked these concerns against both imports and investment, but these two forms of market access should be assessed separately. Manufacturing in the U.S. creates opportunities to expand local employment, negotiate corporate governance, and pursue technology cooperation that direct exports do not necessarily provide. Security risks and competitive pressures would remain, but investment conditions could be negotiated to minimize the impacts or even address them while ensuring that both sides benefit from the arrangement.

This is where the Board of Investment could be most useful. Established to discuss investment opportunities and impediments, it offers a channel for negotiating arrangements that are compatible with American security and industrial interests while delivering benefits to both sides. 

Data security is the first obstacle to address. Under its current connected vehicle rule, the Bureau of Industry and Security (BIS) is phasing in restrictions on China-linked connectivity hardware, automated driving software, and sales by China-linked manufacturers. Neither direct exports nor U.S. assembly alone resolves restrictions arising from the Chinese development or supply of these technologies or Chinese control over the manufacturer.

A structured joint venture in this case could offer an effective solution. American strengths in software engineering make it commercially plausible to combine Chinese expertise in batteries, vehicle platforms, and manufacturing with compliant American connectivity and automated driving systems. Chinese partners could retain a meaningful role in product development and commercial strategy while sensitive data and remote software operations remain under American control. Joint ventures under such an arrangement could thereby preserve important Chinese EV advantages while addressing the security concerns associated with an existing Chinese-controlled product.

Such technological cooperation already has a commercial foundation. In March 2026, NVIDIA announced that BYD and Geely were developing Level 4 autonomous vehicle programs on its Hyperion platform, illustrating how Chinese automakers can incorporate American computing and autonomous driving technologies into their vehicles.

Additionally, BIS also provides case-by-case authorizations for otherwise prohibited transactions, and a joint venture could give the Board of Investment a stronger basis for negotiating such approvals. In a case where restricting Chinese participation in commercially necessary data-related operations weakened the product’s competitiveness, the board could still seek authorization for an arrangement that preserves commercial viability while meeting BIS’s security requirements. 

China also maintains strict technology export controls. A clear demonstration of U.S. willingness to accommodate cooperation could make Beijing more willing to offer corresponding flexibility in technology approvals and regulatory arrangements, further improving the competitiveness of the joint venture’s products.

Joint ventures would offer benefits beyond making disagreements easier to resolve. For Chinese manufacturers, an American partner could share risks and costs. For years, successive U.S. restrictions on Chinese companies and products have created substantial uncertainty for potential investors. An American partner with a direct financial stake in the venture would provide domestic backing, potentially reducing the weight of political risk in Chinese companies’ investment assessments. Chinese firms could also reduce their own investment costs while benefiting from their partners’ market knowledge, distribution channels, and service networks. 

As for American manufacturers, long-standing protective policies have sheltered American manufacturers without resolving their weaknesses in international competition. A sudden entry of wholly Chinese-owned manufacturers could further expose this vulnerability, which helps explain their opposition to both Chinese imports and investment. Joint ventures would instead make Chinese capabilities part of American manufacturers’ own industrial renewal. American firms could incorporate Chinese strengths into their own products and share the returns, turning a potential competitive threat into a partner. Over the longer term, this could support a new round of American automotive development, generate more economic growth and employment, and improve the competitive position of automakers from both countries in larger international markets.

Moreover, current discussions focus primarily on national security and the commercial competitiveness of the automotive industry itself. Yet if the Board of Investment can facilitate U.S.-China joint ventures, their positive spillovers across the broader American supply chain should not be overlooked. A new phase of automotive development would create demand throughout the value chain, from upstream raw materials to downstream sales, stimulating wider U.S. economic activity and opening further opportunities for bilateral investment and technology cooperation. Ford’s new Michigan battery factory, which uses technology licensed from China’s CATL, already illustrates how such cooperation can extend into upstream production. As cooperation expands, related industrial development and investment partnerships could become increasingly common across the American supply chain and between the two countries.

The Board of Investment now has an opportunity to turn shared interests into a practical arrangement. An EV joint venture would test its ability to resolve regulatory disagreements while preserving the commercial value that makes cooperation attractive to both sides. Success would give American industry a path to renewal and Chinese firms a lasting stake in the U.S. market, and it would also help to deepen bilateral cooperation and build a more stable U.S.-China relationship.