US moves to block all Chinese auto imports through software crackdown

The Biden administration proposed new rules blocking the “sale or import” of connected vehicle software originating from “countries of concern,” a move that would effectively ban all auto imports in the US from China.

Vehicles with hardware and software from China pose an “acute” threat to the US’s national security, the White House said in a statement. This includes the potential for “sabotage and surveillance, such as remotely disabling a vehicle in the middle of the road.”

The rules would cover anything that connects a vehicle to the outside world, such as Bluetooth, Wi-Fi, cellular, and satellite components. It also addresses concerns that technology like cameras, sensors, and onboard computers could be exploited by foreign adversaries to collect sensitive data about US citizens and infrastructure.

The rules stem from an investigation launched earlier this year by the Commerce Department into connected vehicle software produced in China and other nations that are considered antagonistic to the US. The regulations would force American automakers and suppliers to remove Chinese-made software and hardware from their vehicles in the coming years.

Earlier this month, the Biden administration locked in new tariffs on Chinese imports, including a 100 percent duty on electric vehicles and new hikes on Chinese made batteries and key minerals.

The proposal was the latest escalation in the ongoing trade restrictions put in place on Chinese-made light-duty vehicles, as well as component parts like computers and batteries. And it comes at a time when China is churning out more cars then ever before, earning its status as the No. 1 auto exporter in the world.

In particular, China has cracked the code on budget-priced, highly affordable EVs, while US and European manufacturers continue to struggle to release their own models. The BYD Seagull, for example, was the country’s bestselling vehicle in August, with about 190 miles of range and a sticker price of around $10,000. Even with a 100 percent tariff, the Seagull would still sell for a price much cheaper than most domestic made EVs.

US officials have expressed concern that allowing China to export EVs to the country would devastate domestic manufacturers — a sentiment backed by auto executives. Tesla CEO Elon Musk has said China would “demolish” the US auto industry without trade barriers — but then later reversed himself and said he opposed tariffs.

China has previously accused the US of repeatedly abusing “the concept of national security” to wrongfully target Chinese companies and impede competition from global markets. 

Under the proposed rules, the software ban would take effect for model year 2027, while the hardware prohibition would become effective for model year 2030.

The new rules could end up mirroring similar provisions in the federal EV tax credits, which prohibit the credit from being applied to vehicles with battery components made in China. The administration has also proposed steep tariffs on Chinese vehicles in an effort to make them too expensive to sell in the US.

The Autonomous Vehicle Industry Association, which represents automakers and tech firms working on self-driving cars, commended the Biden administration for taking this position.

“American national security is foundational,” Jeff Farrah, the group’s CEO, said in a statement. “The autonomous vehicle industry has worked constructively with federal agencies and stakeholders to provide critical information about connected vehicles and how the AV industry works to ensure national security.”