US prepares to ban Chinese auto software and hardware

The Biden administration has expressed growing concern about the potential risks posed by Chinese companies collecting sensitive data from U.S. drivers and infrastructure, as well as concerns about the ability of foreign actors to manipulate vehicles equipped with internet-connected systems and advanced navigation technology.

The proposed rule would ban the import and sale of vehicles from China that have software or hardware for critical communications systems or autonomous driving systems, two people familiar with the matter said. They declined to be named because the decision has not been made public.

The potential ban follows a series of US restrictions targeting imports from China. The Biden administration has already imposed steep tariffs on Chinese imports, including a 100% tax on electric vehicles, along with new tariffs on batteries and critical minerals needed to manufacture electric vehicles.

US Commerce Secretary Gina Raimondo said in May that the risk from Chinese software or hardware in US connected vehicles is very worrying.

“Theoretically, you can imagine the dire consequences if there were a few million cars on the road and the software was disabled,” she said.

Earlier in February, President Joe Biden also ordered an investigation into whether vehicle imports from China pose national security risks related to connected car technology and whether that software and hardware should be banned from all vehicles on US roads.

The Commerce Department is expected to release a draft plan for public comment for 30 days before finalizing it. Almost all newer vehicles on American roads are considered “connected.” Such vehicles have built-in networking hardware that allows them to access the internet, allowing them to share data with devices both inside and outside the vehicle.

If approved, the software ban is expected to take effect starting with the 2027 model year. The types of software banned could include those related to wireless connectivity features such as Bluetooth, GPS, and other infotainment systems. The ban is intended to reduce the risk of cyberattacks and protect users' personal data.

For hardware, the ban would take effect in January 2029 or the 2030 model year (depending on the progress of technology research and development). Affected hardware types could include satellite connectivity modules, sensors and controllers for self-driving systems, as well as other hardware components related to the vehicle's automation features.

Meanwhile, advanced autonomous vehicles, capable of operating fully autonomously without driver intervention, will be banned from circulation until safety and security regulations are completed.

Last November, a group of US lawmakers from both the Democratic and Republican parties jointly warned of growing concerns about Chinese auto and technology companies collecting and processing sensitive personal data of American users during the testing and development of self-driving cars in the US market.

According to reliable sources, this ban is not limited to targeting Chinese companies but can also be extended to other US competitors from countries such as Russia, in order to protect national security interests and maintain US leadership in the field of autonomous car technology.

The proposal has raised concerns in the auto industry as global auto giants such as General Motors, Toyota, Volkswagen, Hyundai and many others have warned of serious difficulties and challenges if the government imposes a ban on hardware and software made by Chinese companies. According to these automakers, replacing the entire system or parts of the current system with other alternatives will be an extremely complicated and time-consuming process.

Automakers stress that modern car electronic systems are the result of complex research, development and integration processes that require perfect compatibility between hardware and software. Any change to any component in this system must undergo a rigorous testing process, including thorough engineering tests, safety and reliability testing, and quality validation processes.

The White House has formally approved the final version of a new regulation aimed at strengthening cybersecurity for the auto industry, according to an official announcement posted on the government website. The regulation marks a significant step in the government’s broader effort to protect the US connected vehicle supply chain from potential cybersecurity risks.

However, the regulation will reportedly not apply to specialized vehicles used for agriculture or mining. This exclusion is intended to facilitate specific industries while minimizing negative impacts on production and business activities.