The US Department of Commerce stated on Friday (September 27) that if the proposed rules to ban Chinese-connected vehicles and the use of Chinese-developed software and hardware in cars are implemented in the US, annual car sales in the country could potentially decrease by up to 25,841 vehicles and prices could rise. The total new car sales in the US for the year 2023 were approximately 15.61 million vehicles.
According to Reuters, the Commerce Department mentioned that the regulations could “affect car prices,” causing US car manufacturers and other companies selling in the US to potentially “lose competitive positioning in the global market due to their cars being relatively more expensive,” estimating a reduction in sales of 1,680 to 25,841 vehicles annually due to the proposed rules.
For national security considerations, the Commerce Department proposed on Monday (September 23) the prohibition of Chinese software and hardware in connected vehicles operating on US roads. This move effectively would block almost all Chinese cars and trucks from entering the US market.
As per the notice issued by the Bureau of Industry and Security (BIS) on Monday, the proposed rules would ban the import or sale of connected vehicles manufactured by entities that are owned, controlled, or influenced by China or Russia, ban the sale or import of “vehicle connectivity systems” that are designed, developed, manufactured, or supplied by individuals owned, controlled, or influenced by China or Russia, along with some related software in connected vehicles.
In a press release, the BIS reiterated its findings that certain technologies from China or Russia pose undue risks to critical US infrastructure and users of connected vehicles.
White House National Security Advisor Jack Sullivan mentioned in a briefing that the US has ample evidence showing that the Chinese Communist Party (CCP) has placed malicious software in critical US infrastructure.
Commerce Secretary Gina Raimondo stated, “Today’s cars are equipped with cameras, microphones, GPS tracking, and other internet-connected technologies. It’s not hard to imagine how a foreign adversary with access to this information could pose a serious threat to our national security and the privacy of American citizens. To address these national security concerns, the Commerce Department is taking targeted proactive measures to prevent Chinese (CCP) and Russian-manufactured technology from appearing on US roads.”
The proposed rule would encompass all types of vehicles on public roads, including passenger cars, motorcycles, buses, light and medium-duty trucks, and eight classes of commercial trucks.
According to Reuters, the provisions in this plan would also compel major US and other automobile manufacturers to remove crucial Chinese software and hardware from US vehicles in the coming years.
The software ban under this proposal would take effect in the 2027 model year, while the hardware ban would be implemented in the 2030 model year or by January 2029.
The Commerce Department has provided the public with 30 days to comment on the proposal, aiming to complete all procedures by January 20, 2025.
This move indicates a significant escalation in US restrictions on Chinese vehicles, software, and parts.
Raimondo emphasized, “When foreign adversaries develop software to manufacture vehicles, that means it can be employed for surveillance, remote control, posing a threat to privacy and safety of Americans on the road. In extreme cases, foreign adversaries may potentially simultaneously shut down or control all vehicles operational in the US, leading to accidents and road congestion.”
Nearly all new small cars and trucks in recent years are “connected,” with onboard network hardware allowing internet access and data sharing with devices inside and outside the vehicle. The ban being discussed by the Biden administration will affect vehicles with Bluetooth, satellite, and wireless capabilities, as well as highly automated vehicles that don’t require driver control.
Liz Cannon, director of the Office of Information and Communication Technology at the Commerce Department, stated, “We anticipate that any vehicles currently manufactured in China and sold in the US will be subject to the restrictions imposed by the ban.”
She added that the regulation would force General Motors and Ford Motor to cease selling cars imported from China in the US.
General Motors sells approximately 22,000 Buick Envision and Ford sells about 17,500 Lincoln Nautilus, both assembled in China, in the US market in the first half of 2024.