In the interest of national security, the Biden administration has proposed a ban on the use of Chinese-made software and hardware in internet-connected cars in the United States. This ban could become the most powerful weapon against the influx of cheap electric vehicles from China. Unlike previous measures, this ban would apply to vehicles manufactured by Chinese companies outside of China.
This proposed ban is the latest move by the Biden administration to address the Chinese electric vehicle industry. American politicians and manufacturers have long viewed Chinese electric vehicles as a serious threat to U.S. jobs and national security.
Previously, the U.S. imposed a 100% tariff on Chinese-made electric vehicles and revoked eligibility for the $7,500 consumer subsidy for any models containing Chinese components.
According to a report from Reuters on Tuesday, the U.S. Department of Commerce is introducing a ban specifically targeting internet-connected car technology, which would apply to vehicles produced by Chinese companies outside of China, such as those manufactured in Mexico or Europe.
On Monday, the Department of Commerce proposed a new regulation prohibiting vehicles utilizing Chinese-made software and hardware from operating on U.S. roads, effectively blocking almost all Chinese cars from entering the American market. An official from the Department of Commerce told Reuters that under the new regulation, General Motors and Ford would have to halt the export of cars from China to the U.S.
According to a White House announcement on Monday, the ban on software is set to take effect starting with the 2027 model year, while the hardware ban will come into force for the 2030 model year. For products without model years, the ban will take effect on January 1, 2029.
The U.S. government aims to pass this new regulation before Biden leaves office on January 20, 2025.
White House National Economic Advisor Lael Brainard stated during a speech at the Michigan Workforce Hub in Detroit that the source of technology in internet-connected cars has significant implications for national security, road safety, and the resilience of the automotive supply chain.
She warned that the Chinese Communist Party has taken measures to try to dominate the future of internet-connected cars through software and hardware systems related to automobiles.
Brainard noted that the use of Chinese software and hardware systems in internet-connected cars could pose new risks for Americans. Without proper safeguards, sensitive data of Americans could potentially be shared with Chinese authorities, or internet-connected cars could serve as backdoors for malicious foreign actors engaged in espionage or sabotage activities.
According to the Department of Commerce’s investigation, the increasing connectivity in vehicles creates opportunities for collecting and exploiting sensitive information. The White House stated that certain hardware and software in internet-connected cars could enable the collection of geographical or critical infrastructure information and provide opportunities for malicious actors to disrupt infrastructure operations or the cars themselves.
Many U.S. allies, including Canada and the European Union, have indicated they will follow suit. Canadian Finance Minister Chrystia Freeland stated on Tuesday that Canada, closely allied with the U.S. in the automotive industry, is “definitely” considering implementing a similar ban.