By David Shepardson
WASHINGTON (Reuters) – The U.S. Commerce Department is expected to propose banning Chinese software and hardware in connected and autonomous vehicles on U.S. roads on Monday due to national security concerns, two sources told Reuters.
The Biden administration has raised serious concerns about Chinese companies collecting data on American drivers and infrastructure, as well as potential foreign manipulation of internet-connected vehicles and navigation systems.
The proposed regulation would ban the import and sale of vehicles from China with key communications software or hardware or automated driving systems, said the two sources, who declined to be identified because the decision had not been disclosed publicly.
The move marks a significant escalation of existing U.S. restrictions on Chinese vehicles, software and components. Last week, the Biden administration imposed steep tariff increases on Chinese imports, including a 100% tariff on electric vehicles, as well as new increases on EV batteries and key minerals.
Commerce Secretary Gina Raimondo said in May that the risks of Chinese software or hardware in American connected vehicles were significant.
“Theoretically, we can imagine the most catastrophic outcome: if we had a couple million cars on the road and the software was disabled,” he said.
In February, President Joe Biden ordered an investigation into whether Chinese vehicle imports pose national security risks related to connected car technology, and whether such software and hardware should be banned from all vehicles on U.S. roads.
“China’s policies could flood our market with their vehicles, which would pose a risk to our national security,” Biden said earlier. “I’m not going to allow that to happen on my watch.”
The Commerce Department plans to give the public 30 days to comment before the rules are finalized, the sources said. Nearly all newer vehicles on U.S. roads are considered “connected.” Such vehicles have built-in networking hardware that enables Internet access, allowing them to share data with devices both inside and outside the vehicle.
The department also plans to propose that the software bans take effect beginning with the 2027 model year and that the hardware ban take effect in January 2029 or the 2030 model year. The bans in question would include vehicles with certain Bluetooth, satellite and wireless features, as well as highly autonomous vehicles that could operate without a driver behind the wheel.
In November, a bipartisan group of U.S. lawmakers raised concerns about the collection and handling of sensitive data by Chinese auto and technology companies as they test autonomous vehicles in the United States.
The bans would extend to other foreign adversaries of the United States, including Russia, the sources said.
A trade group representing major automakers, including General Motors (NYSE:), Toyota Motor (NYSE:), Volkswagen (ETR:), Hyundai (OTC:) and others had warned that changing hardware and software would take time.
The automakers noted that their systems “undergo extensive pre-production engineering, testing and validation processes and are generally not easily interchangeable with systems or components from a different supplier.”
The Commerce Department declined to comment on Saturday. Reuters was first to report, in early August, details of a plan that would have the effect of banning autonomous vehicle testing by Chinese automakers from U.S. roads. There are relatively few light vehicles made in China that are imported into the United States.
The White House approved the final proposal on Thursday, according to a government website. The rule is aimed at ensuring the security of the U.S. connected vehicle supply chain. It will apply to all vehicles on U.S. roads, but not agricultural or mining vehicles, the sources said.
Biden noted that most cars are connected like smartphones on wheels, linked to phones, navigation systems, critical infrastructure and the companies that made them.