A move that is set to escalate an already aggravated US-China trade war, the Biden administration is proposing a new set of rules, that would effectively end the import and sale of Chinese vehicles, specially EVs, in the states.
The US Commerce Department has proposed new regulations, particularly targeting Chinese-made software and hardware used in internet-connected vehicles. This move comes at a time when the Biden administration has concerns over national security risks associated with foreign technology embedded in vehicles, and marks an escalation in the ongoing tensions between the US and China over trade and technology.
The proposed rules would effectively ban Chinese vehicles from the US market, as well as any vehicles that contain Chinese software or hardware for internet connectivity. “Chinese automakers are seeking to dominate connected vehicle technologies in the United States and globally, posing new threats to our national security, including through our supply chains.”, said White House in a statement.
Under these new regulations, companies would need to phase out Chinese-made software by the 2027 model year, while hardware components would be banned starting in January 2029. Automakers can apply for exceptions if they can demonstrate effective mitigation strategies, but officials have made it clear that the ban will likely include all Chinese-made vehicles and associated technology.
The Biden administration’s investigation into connected vehicles revealed multiple national security risks posed by these technologies. Senior officials expressed concern that foreign actors, particularly from China, could use these components to collect sensitive data on American drivers, such as where they live, work, or send their children to school. There are also fears that, in an extreme case, foreign adversaries could remotely disable vehicles, leading to widespread chaos on US roads. These concerns also extend to critical infrastructure. Connected vehicles are often integrated with smart roads, charging stations, and other key elements of a nation’s infrastructure. Allowing adversarial nations access to these systems could have devastating consequences in the event of a cyberattack.
Switching away from Chinese hardware will not be a simple task for US automakers. As John Bozzella, CEO of the Alliance for Automotive Innovation, has pointed out, the automotive supply chain is one of the most complex in the world. Replacing Chinese components with alternatives from other countries will take time. Moreover, while the presence of Chinese software in US cars is relatively limited, Chinese hardware plays a much larger role in the industry.
The proposed ban is expected to hit Chinese automakers particularly hard. China has emerged as the world’s leading exporter of automobiles, with companies like BYD producing low-cost electric vehicles (EVs) that threaten to undercut US-made alternatives. Even with existing tariffs on Chinese imports, these vehicles remain significantly cheaper than their American counterparts. For example, the BYD Seagull, China’s bestselling EV in 2023, offers a range of about 190 miles and retails for approximately $10,000. Even with a 100% tariff, this vehicle would still be more affordable than most US-made electric cars. While Chinese car manufacturers would suffer the most from the proposed ban, US automakers are not immune to the effects. Many American manufacturers currently rely on Chinese-made hardware for their connected vehicle systems, such as sensors, chipsets, and antennas. The hardware ban, set to take effect by 2030, would require automakers to overhaul their supply chains.
