US proposes banning Chinese software and components in vehicles

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The US Commerce Department on Monday proposed banning Chinese software and hardware for vehicles with a built-in internet connection, in a move that would effectively ban Chinese vehicles from the US market.

The rule follows concerns from the Biden administration about Chinese companies collecting data on American drivers and infrastructure as well as the potential for foreign adversaries to remotely manipulate connected cars on US roads. 

It is the latest step in a wider US effort to crack down on Chinese vehicles, software and components. The US already this year sharply raised tariffs on Chinese imports, including a 100 per cent tariff on Chinese electric vehicles.

The rule would allow companies to pursue some exceptions to the ban if they could show they are taking mitigating measures such as auditing or site checking. But officials said the rule would essentially ban Chinese vehicles.

“Our assumption as of now is that Chinese vehicles will fall within the prohibition,” a senior official said.

The rule would also ban Russian software and hardware. Biden in February ordered an investigation into whether Chinese connected vehicles pose a security risk to Americans.

There are few Chinese or Russian cars on the road in the US currently and the rule is designed to neutralise the national security threat they could pose in the future, officials said.

“We’re issuing a proposed rule to address these new national security threats before suppliers, automakers and car components linked to China or Russia become commonplace and widespread in the US automotive sector,” commerce secretary Gina Raimondo said.

She pointed to Europe as a “cautionary tale,” where Chinese cars have quickly flooded the market.

“We know the Chinese playbook, they subsidise, so we’re not going to wait until our roads are filled with cars and the risk is extremely significant,” she said.

The Biden administration will draft a final rule after a 30-day public comment period, with the goal of publishing it before it leaves office. The software bans included would apply in the 2027 model year while the hardware bans take effect in January 2029 or 2030.

The commerce department is assessing other industries where they might want to take similar action, such as drones or cloud infrastructure, officials said.

Officials said that phasing out Chinese and Russian software from the US market would be relatively simple as there is not much of it, but that hardware would be a greater challenge.

“The hardware supply chain for these systems is slightly more complicated, there is more Chinese hardware,” a senior US official said. “During that time . . . there will need to be a focus on some shifting of that supply chain to other suppliers.”

The commerce department’s seven-month investigation into risks from connected vehicles revealed a range of possible threats as they become more connected to critical infrastructure, including through charging stations, smart roads and cities, officials said.

Senior US officials outlined a range of possible threats to American consumers, such as collecting data on where drivers live, send their children to school or go to the doctor.

In an extreme example, they said a foreign adversary could shut down or take control of all of their vehicles operating in the US, causing crashes and blocking roads.

“We’ve already seen ample evidence of the PRC pre-positioning malware on our critical infrastructure for the purpose of disruption and sabotage,” US national security adviser Jake Sullivan said.

“With potentially millions of vehicles on the road, each with 10 to 15 year lifespans, the risk of disruption and sabotage increases dramatically.”