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When lawmakers on Capitol Hill asked how China’s auto ambitions and physical AI could reshape American power, Applied Intuition Co-founder and CTO Peter Ludwig came with an answer. In a hearing today titled “Trojan Horse: China’s Auto Threat to America,” members examined how automotive technology, physical AI systems, and supply chains are reshaping global competition and national security.
“During World War II, the American automotive sector retooled overnight to become what President Roosevelt called the ‘Arsenal of Democracy,’ producing the trucks, tanks, ships, and aircraft that helped defend freedom for the world,” Ludwig said. But in the decades that followed, our national policies shifted production overseas, as China engaged in unfair trade practices. This led to soaring trade deficits and the hollowing out of America's industrial capacity. Manufacturing capacity moved offshore and the U.S. became increasingly dependent on foreign production for everything from semiconductors to critical vehicle components.
Today, he argued, the United States faces a new challenge. “We must unite Detroit’s manufacturing strength with Silicon Valley’s innovation and speed to ensure that AI, autonomy, and software-defined vehicles are developed and built in America.”
Three themes emerged from the testimony: why software-defined vehicles are becoming strategic infrastructure, how dual-use autonomy links U.S. industry and defense, and where China’s connected vehicles pose growing economic and security risks. As Ludwig noted, these trends are part of a broader rise of physical AI—intelligent machines operating in the real world across commercial and defense applications.
Cars, AI, and the “Digital Arsenal”
The testimony framed the automotive sector as entering a new era. Vehicles are no longer just machines that move people and goods; they are AI and data platforms woven into the fabric of national power. The core argument is that vehicles are becoming part of this new digital arsenal.
“For most Americans,” Ludwig said, “their car will soon become the most tangible and trusted expression of AI in daily life.”
Software-defined Vehicles as Strategic Infrastructure
The automotive industry is undergoing a generational transition from hardware-centric design to software-defined vehicles (SDVs). Where differentiation once depended on engines, chassis, and transmissions, it increasingly depends on software: perception, planning, connectivity, and continuous over‑the‑air updates that improve vehicles long after they leave the factory.
That software-defined character shows up in several ways:
- Software perception systems that interpret the vehicle’s surroundings
- Planning and decision-making logic that determines how the vehicle moves
- Connectivity and over‑the‑air updates that change behavior and capabilities over time
Because these vehicles move people, goods, and data, they are becoming strategic infrastructure. They sit at the intersection of critical supply chains, traffic and logistics networks, and sensitive geolocation and behavioral information.
Applied Intuition’s role in SDVs
Applied Intuition was founded eight years ago to help automakers and other mobility players navigate this shift. The company builds simulation, validation, autonomy, and vehicle software platforms that allow manufacturers to design, test, and deploy advanced driver-assistance and autonomous systems at scale.
Work that began in automotive now also supports defense, trucking, construction, mining, agriculture, and other sectors that depend on intelligent machines operating in complex, real-world environments.
Dual-use Autonomy: Detroit, Silicon Valley, and the Pentagon
A central theme in the hearing was that autonomy is inherently dual-use. The same foundations that enable a commercial vehicle to navigate traffic—sensing, perception, world modeling, decision making, and rigorous validation—are also required for unmanned ground vehicles, autonomous aircraft, and maritime systems.
From demo to fielded vehicle
One recent example shows how quickly commercial-grade autonomy can transfer to the field. Earlier this year, Applied Intuition hosted the Secretary of the Army and the Army Chief of Staff at its Silicon Valley headquarters. After seeing production vehicles running advanced autonomy and driver-assistance capabilities, they asked how long it would take to retrofit similar technology onto an Infantry Squad Vehicle.
The challenge was to do it in less than 10 days. An ISV arrived in the garage, and within six days it was driving autonomously off‑road in the California mountains. Two weeks later, soldiers from the 101st Airborne Division were testing it at the Joint Readiness Training Center at Fort Polk in Louisiana.
That progression—from demonstration to autonomous off‑road driving to soldier evaluation in a matter of weeks—was possible because the underlying software, simulation, and validation stack was already mature from years of automotive work. The same pattern appears across domains: commercial innovation in autonomy and vehicle intelligence, when aligned with defense requirements and acquisition pathways, can deliver meaningful capability to warfighters at the speed operational realities demand.
China’s Connected Vehicles as a “Trojan horse”
The testimony also highlighted how China has recognized the strategic nature of automotive and autonomy technology and is moving aggressively to dominate both markets and supply chains. Only a few years ago, many Chinese manufacturers were known primarily for copying Western vehicle designs. Today, they are producing original, high-quality, software-defined vehicles that in some cases rival or exceed Western offerings, while undercutting them on cost.
Chinese automakers already sell highly connected, intelligent vehicles for roughly $10,000—around one-third the cost of comparable U.S. models. That price point is not an accident. It is powered by extensive state subsidies, coordinated industrial policy, and dominance in critical components such as, some semiconductors, rare earth elements, and increasingly LiDAR and other sensors.
Economic strength, strategic risk
The concern is not only economic displacement but also security risk. Chinese-built connected and autonomous vehicles can create a “Trojan horse” in foreign markets: a low-cost, attractive product that also functions as a networked sensor platform. Deployed at scale across roads and logistics networks, such vehicles can collect detailed mobility, routing, and behavioral data, and can receive remote updates or commands through cloud-connected systems.
Under the PRC’s civil‑military fusion strategy, commercial advances and data streams can be leveraged to support the capabilities of the People’s Liberation Army.
“Chinese-connected vehicles pose the same kind of pervasive data and influence risk in the physical world that TikTok represents in the digital world, potentially making them the TikTok of physical AI,” Ludwig said. Examples from allied markets—such as Chinese-built buses deployed in major UK cities that later raised security concerns due to their connectivity and data paths—show that these risks are not hypothetical. Once such platforms are deeply integrated into fleets and infrastructure, unwinding that dependence can be slow, costly, and politically difficult.
Policy and Industry Priorities that Follow
Taken together, these points are not just diagnostic. They imply specific actions for policymakers and industry.
What policymakers and industry can do next
From these realities—software-defined vehicles as infrastructure, dual-use autonomy, and China’s push in connected vehicles—the testimony outlined several priorities:
- Enact reciprocal policies across trade and industry incentives that enable fair competition. The PRC cannot have unfettered access to our markets while denying the same to American companies.
- Treat the automotive and autonomy sector as strategic infrastructure. This includes setting a national agenda that supports innovation, software-defined architectures, secure supply chains, and sustained investment in STEM talent and technical training.
- Accelerate Department of War acquisition reforms and other mechanisms that move proven commercial autonomy and vehicle software into defense applications faster. The goal is to expand the defense industrial base with many more dual-use companies to increase competition and deliver commercially proven technology to the warfighter.
- Reduce dependencies on Chinese-controlled inputs and coordinate closely with allies. That means diversifying sources for semiconductors, rare earths, sensors and other components, while aligning standards, export controls, and procurement guidance for connected and autonomous vehicles—especially in public fleets and other sensitive sectors.
Shared Responsibility to Lead
The hearing underscored a shift in how policymakers, industry leaders, and technologists think about vehicles. Cars, trucks, and other platforms are no longer just consumer products; they are nodes in a global network of AI‑enabled, software-defined systems that carry people, goods, and data. How the United States manages this transition will shape both economic competitiveness and national security for decades.
Applied Intuition’s work across automotive, trucking, industrial equipment, and defense provides a clear vantage point on this transformation, as the same vehicle intelligence and autonomy platforms that help commercial customers ship safer, smarter products also help defense partners field trusted capabilities faster.
As the United States considers how to strengthen its “digital arsenal of this century,” Applied Intuition will continue working with automakers, suppliers, government agencies, and allied organizations to develop, test, and deploy safe, secure autonomy and software-defined vehicles at scale.
