By Steven Symes 
Pirelli, the popular tire company you might know and love, is right now in the middle of a growing geopolitical controversy. What happens next in the complicated situation could have long-lasting effects for the brand’s future in the US market.
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Chinese investor Sinochem Holdings Corp. owns a 37 percent stake in Pirelli. Because that company is owned by the Chinese state, that means Pirelli tires can’t be used on connected vehicles in the US.
While the Italian government has taken steps to limit the power of Sinochem Holdings Corp. over Pirelli’s actions, the US government has said it’s not enough, reports The Detroit News. That puts the tire company in a perilous position.
The Italians have been grappling with Sinochem, recognizing the company could seriously hamper a company that’s vital to the European country’s infrastructure. Under pressure, the Chinese company, which inherited the shares in Pirelli when it bought out a chemical company, has indicated it has no intention of divesting from the tiremaker.
You might be wondering how tires constitute a national security concern. Well, Pirelli has been developing its Cyber Tyre system that gathers real-time data and feeds it to the car, giving you as the driver helpful alerts and other info.
It looks like there might be a showdown with the US Commerce Department’s Bureau of Industry and Security standing up to the Italians and Chinese. With trade tensions running high these days, that could spell serious trouble.
After all, about 25 percent of Pirelli’s annual revenue comes from the US market. If it were suddenly closed off from the brand, that would be catastrophic. But Pirelli also sees not expanding into the smart tire market as a huge misstep for the future.
This is one of many examples of strategic Italian companies, some in the automotive industry, with major Chinese investors. Because of US demands, the Italian government reportedly is considering taking dramatic steps to turn the situation around, before trade with the US is severely damaged.
Image via Pirelli