Exclusive: US to Propose Ban on Chinese Software and Hardware in Connected Vehicles, Sources Say

By David Shepardson

WASHINGTON – The U.S. Commerce Department is poised to propose a ban on Chinese software and hardware in connected and autonomous vehicles on American roads due to national security concerns, according to two informed sources.

The Biden administration has expressed significant apprehension regarding the data collection practices of Chinese companies involving U.S. drivers and infrastructure, as well as the risks of foreign manipulation of internet-connected vehicles and navigation systems.

The proposed regulation aims to prohibit the import and sale of vehicles from China that contain critical communications or automated driving system software or hardware. The sources, who remain anonymous because the decision has not yet been publicly announced, highlighted the seriousness of the situation.

This proposal represents a major escalation in the current restrictions placed on Chinese vehicles, software, and components by the United States. Just last week, the Biden administration enacted substantial tariff increases on Chinese imports, including imposing a 100% duty on electric vehicles along with additional hikes on electric vehicle batteries and essential minerals.

Commerce Secretary Gina Raimondo noted in May that the risks associated with Chinese software or hardware in U.S. connected vehicles are considerable. She warned about the potentially catastrophic outcomes if a large number of cars were compromised.

In February, President Joe Biden ordered an investigation to determine whether imports of Chinese vehicles pose national security risks related to connected-car technology and whether banning such software and hardware from all vehicles on U.S. roads is warranted. Biden emphasized his commitment to preventing risks to national security posed by unregulated competition from China.

The Commerce Department plans to allow a 30-day public comment period before finalizing the rules. Nearly all modern vehicles on U.S. roads are classified as “connected,” featuring onboard network hardware that facilitates internet connectivity and data sharing.

The department is also expected to make the software prohibitions effective for the 2027 model year, while hardware bans would come into force in January 2029 or align with the 2030 model year. The prohibitions would encompass vehicles containing specific Bluetooth, satellite, and wireless technologies, as well as highly autonomous vehicles capable of driving without a human operator.

A bipartisan group of U.S. lawmakers raised concerns last November regarding Chinese auto and tech companies handling sensitive data while testing autonomous vehicles in the United States.

The proposed restrictions would also apply to other U.S. adversaries, including Russia. A trade group representing major automakers, including General Motors and Toyota, cautioned that changes to hardware and software would require significant time, as their systems undergo comprehensive pre-production engineering, testing, and validation processes that make swapping out components with those from different suppliers challenging.

The Commerce Department has not provided comments on this matter. Earlier reports in August disclosed plans to effectively prohibit Chinese automakers from testing autonomous vehicles on U.S. roads, even as the volume of imported Chinese light-duty vehicles remains relatively low.

The White House has finalized the proposal as part of an effort to secure the supply chain for U.S. connected vehicles. The rule will encompass all vehicles on American roads, with exceptions made for agricultural and mining vehicles.

President Biden remarked that most modern cars are connected in a manner similar to smartphones, linking with navigation systems, critical infrastructure, and manufacturers.