By David Shepardson
WASHINGTON (Reuters) – The U.S. Commerce Department is expected to propose a ban on Chinese software and hardware in connected and autonomous vehicles on U.S. roads over national security concerns, two sources told Reuters.
The Biden administration has raised serious concerns about Chinese companies collecting data on American drivers and infrastructure, and about potential foreign manipulation of internet-connected vehicles and navigation systems.
The proposed regulations would ban the import and sale of vehicles from China with key communications or automated driving systems or software or hardware, said the two sources, who asked not to be named because the decision has not yet been made public.
The move is a significant escalation in the United States’ ongoing 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 and new hikes on EV batteries and key minerals.
Commerce Secretary Gina Raimondo said in May that the risks of Chinese software or hardware in U.S. internet-connected vehicles are significant.
“You can theoretically imagine the most disastrous consequences if you have a few million cars on the road and the software is turned off,” she said.
President Joe Biden in February ordered an investigation into whether Chinese imports of connected car technology pose a national security risk and whether that software and hardware should be banned from all vehicles on U.S. roads.
“China’s policies could flood our market with their vehicles, which poses a risk to our national security,” Biden said earlier. “I’m not going to let that happen on my watch.”
The Commerce Department plans to give the public 30 days to comment before finalizing the rules, 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 implement the software bans beginning with the 2027 model year, and the hardware ban would go into effect in January 2029 or the 2030 model year. The bans in question would include vehicles with certain Bluetooth, satellite and wireless capabilities, as well as highly autonomous vehicles that can operate without a driver behind the wheel.
A group of bipartisan US lawmakers raised alarms in November about Chinese auto and technology companies collecting and processing confidential data during self-driving car tests in the United States.
The bans would also apply to other foreign U.S. adversaries, including Russia, the sources said.
A trade association representing major automakers including General Motors, Toyota Motor, Volkswagen, Hyundai and others warned that it would take time to change the hardware and software.
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 another supplier.”
The Commerce Department declined to comment on Saturday. Reuters first reported details of a plan in early August that would ban Chinese automakers from testing autonomous vehicles on U.S. roads. Relatively few Chinese-made light vehicles are imported into the United States.
The White House approved the final proposal on Thursday, according to a government website. The rule is intended to ensure the security of the supply chain for U.S. connected vehicles. The rule will apply to all vehicles on U.S. roads, but not to agricultural or mining vehicles, the sources said.
Biden noted that most cars are connected to each other, like smartphones on wheels: They are linked to phones, navigation systems, critical infrastructure and the companies that made them.
(Reporting by David Shepardson in Washington; Editing by Lananh Nguyen, Paul Simao and Matthew Lewis)