US plans to prohibit key Chinese software, hardware in connected vehicles | Trade War News

The move is a significant escalation in US restrictions on Chinese vehicles, software and components.

The United States Department of Commerce has proposed prohibiting key Chinese software and hardware in connected vehicles on American roads due to national security concerns, a move that would in effect bar Chinese cars and trucks from the US market.

The planned regulation, proposed on Monday, would also force American and other major automakers in years ahead to remove key Chinese software and hardware from vehicles in the US.

President Joe Biden’s administration has raised concerns about data collection on US drivers and infrastructure by connected Chinese vehicles and potential foreign manipulation of vehicles connected to the internet and navigation systems. In February, the White House ordered an investigation.

The proposed prohibitions would prevent testing of self-driving cars on US roads by Chinese automakers, extend to vehicle software and hardware produced by Russia, and could be extended to other US adversaries.

The proposal would make software prohibitions effective in the 2027 model year. The hardware ban would take effect in the 2030 model year, or January 2029.

The Commerce Department is giving the public 30 days to comment on the proposal and hopes to finalise it by January 20. The rules would cover all on-road vehicles but exclude agricultural or mining vehicles not used on public roads as well as drones and trains.

The move is a significant escalation in US restrictions on Chinese vehicles, software and components. This month, the Biden administration locked in steep tariff hikes on Chinese imports, including a 100 percent duty on electric vehicles (EVs) and hikes on EV batteries and key minerals.

“When foreign adversaries build software to make a vehicle, that means it can be used for surveillance, can be remotely controlled, which threatens the privacy and safety of Americans on the road,” Commerce Secretary Gina Raimondo said. “In an extreme situation, a foreign adversary could shut down or take control of all their vehicles operating in the United States all at the same time, causing crashes, blocking roads.”

Risk of disruption

There are relatively few Chinese-made cars or light-duty trucks imported into the US. Raimondo said the department is acting “before suppliers, automakers and car components linked to China or Russia become commonplace and widespread. … We’re not going to wait until our roads are filled with cars and the risk is extremely significant.”

Nearly all newer cars and trucks are considered “connected” with onboard network hardware for internet access, allowing sharing of data with devices inside and outside the vehicle.

The Commerce Department said the rule would amount to a ban on all vehicles manufactured in China but would allow Chinese automakers to seek “specific authorizations” for exemptions.

“We anticipate at this point that any vehicle that is manufactured in China and sold in the US would fall within the prohibitions,” said Liz Cannon, who heads the Commerce Department’s information and communications technology office.

She added the regulation would force General Motors (GM) and Ford Motor to stop selling vehicles imported from China in the US.

The US has ample evidence of China prepositioning malware in critical American infrastructure, White House National Security Adviser Jake Sullivan said at a briefing.

“With potentially millions of vehicles on the road, each with 10- to 15-year lifespans, the risk of disruption and sabotage increases dramatically,” Sullivan said.

Chinese Ministry of Foreign Affairs spokesperson Lin Jian said China urges Washington “to respect market principles and provide Chinese companies with an open, fair, transparent and nondiscriminatory business environment. China will firmly safeguard its legitimate rights and interests.”

The Alliance for Automotive Innovation, a group representing major automakers – including GM, Toyota, Volkswagen and Hyundai – said some automakers may need more time to comply.

The group said there is “very little” connected vehicle hardware or software “that enters the US from China. But this rule will require auto manufacturers in some cases to find alternate suppliers.”