By David Shepardson
WASHINGTON (Reuters) – The U.S. Commerce Department on Monday proposed banning key Chinese software and hardware in connected vehicles from U.S. roads over national security concerns, a move that would effectively bar nearly all Chinese cars from entering the U.S. market.
The planned regulation, first reported by Reuters, would also force U.S. and other major automakers in coming years to remove key Chinese software and hardware from vehicles in the United States.
The Biden administration has expressed deep concern about Chinese companies collecting data on American drivers and infrastructure through connected vehicles, as well as potential foreign manipulation of internet-connected vehicles and navigation systems. The White House ordered an investigation into the potential dangers in February.
The bans would prevent testing of autonomous cars on U.S. roads by Chinese automakers and extend to vehicle software and hardware produced by other foreign adversaries of the United States, including Russia.
“When foreign adversaries create software to build a vehicle that can be used for surveillance and can be controlled remotely, that threatens the privacy and safety of Americans on the road,” Commerce Secretary Gina Raimondo said at a briefing.
“In an extreme situation, a foreign adversary could shut down or take control of all of your vehicles operating in the United States at the same time, causing accidents and blocking roads.”
The move marks a significant escalation of existing U.S. restrictions on Chinese vehicles, software and components. Earlier this month, the Biden administration imposed steep tariff increases on Chinese imports, including a 100% tariff on electric vehicles, as well as further increases on EV batteries and key minerals.
Relatively few Chinese-made cars and light trucks are imported into the United States, but Raimondo said the department is acting “before suppliers, automakers and auto components linked to China or Russia become common and widespread in the American auto sector… We are not going to wait until our roads are full of cars and the risk is extremely significant before we act.”
Nearly all newer cars and trucks are considered “connected” with onboard networking hardware that enables Internet access, allowing them to share data with devices both inside and outside the vehicle.
A senior administration official confirmed the proposal would effectively ban all existing Chinese cars and light trucks from the U.S. market, but added it would allow Chinese automakers to seek “specific authorizations” to obtain exemptions.
The United States has ample evidence that China is planting malware on critical U.S. infrastructure, White House national security adviser Jake Sullivan said at the same news conference.
“With potentially millions of vehicles on the road, each with a lifespan of 10 to 15 years, the risk of disruption and sabotage increases dramatically,” Sullivan said.
Last month, the Chinese embassy in Washington criticized the planned move to limit Chinese vehicle exports to the United States: “China urges the United States to strictly abide by market principles and international trade rules and create a level playing field for enterprises from all countries. China will firmly defend its legitimate rights and interests.”
The proposal calls for the software bans to take effect beginning with the 2027 model year, while the hardware ban would take effect beginning with the 2030 model year or in January 2029.
The Commerce Department has given the public 30 days to comment on the proposal and hopes to finalize it by Jan. 20. The rules would apply to all highway vehicles but would exclude agricultural or mining vehicles not used on public roads.
The Alliance for Automotive Innovation, a group representing major automakers including General Motors (NYSE:), Toyota (NYSE:), Volkswagen (ETR:) and Hyundai (OTC:) have warned that changing hardware and software would take time.
The group noted that connected vehicle hardware and software are developed around the world, including in China, but could not detail the extent to which Chinese-made components are prevalent in U.S. models.
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