The US Commerce Department is set to propose a ban on Chinese software and hardware in connected and autonomous vehicles operating on American roads due to concerns over national security, reported Reuters. According to two undisclosed sources cited by the news agency, the proposal is expected to be presented this week.
The Biden administration is said to have expressed significant worries about the potential risks posed by Chinese companies collecting data on US drivers and infrastructure. It also has concerns that foreign entities could manipulate vehicles connected to the internet and navigation systems.
Once enacted, the regulation would prohibit the import and sale of vehicles from China that contain essential communications or automated driving system software or hardware. Sources said that the new step marks a significant escalation in the ongoing restrictions of the US on Chinese vehicles, software, and components.
Biden administration wary about Chinese chips in US market
The move comes after the Biden administration’s decision last week to increase tariffs on Chinese imports, including a 100% duty on electric vehicles (EVs) and higher tariffs on EV batteries and essential minerals.
The US Trade Representative (USTR) also proposed increasing tariffs for certain tungsten products, wafers, and polysilicon. The semiconductors tariff is set to be increased to 50% by 2025. This was in line with its review of China’s technology policies.
US Commerce Secretary Gina Raimondo previously noted the dangers posed by Chinese software and hardware in connected American vehicles. “You can imagine the most catastrophic outcome theoretically if you had a couple million cars on the road and the[ir] software [was] disabled,” Raimondo said in May.
Earlier this year, President Joe Biden ordered a probe on whether Chinese vehicle imports posed national security risks, particularly about connected-car technology. The investigation was to determine if the software and hardware in question should be banned in all vehicles on US roads.
The sources also said that the proposed regulation aims to make the software prohibitions effective for vehicles with the 2027 model year, while the hardware ban would take effect in January 2029 or for the 2030 model year.
The prohibitions would target vehicles with certain bluetooth, satellite, and wireless features, as well as highly autonomous vehicles that do not require a driver behind the wheel. They are also expected to extend to other foreign adversaries of the US, including Russia, the sources added.
Automakers taking dim view of new regulations
A trade group representing automakers such as General Motors, Volkswagen, Toyota, and Hyundai has voiced concerns about the proposed changes. The automakers warned that altering the hardware and software in vehicles would take significant time.
The association said that the systems will undergo lengthy pre-production engineering, testing, and validation processes. As a result, these systems cannot be easily replaced with those from a different supplier.
The White House gave final approval for the proposal last week, according to a government website. The new rule aims to secure the supply chain for US-connected vehicles and will apply to all vehicles on American roads, except for those used in agriculture and mining, indicated the sources.
Concerns regarding Chinese companies’ collection of sensitive data through autonomous vehicle testing in the US have been growing. In November, a bipartisan group of US lawmakers raised alarms about this issue.
Earlier this year, the Semiconductor Industry Association (SEMI) critiqued the European Commission’s strategy to impose export controls on China. It said that the controls could backfire on EU companies.
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