U.S. Crackdown on Chinese Car Tech: What’s Coming Next

Why the ban?

Today’s traditional gas-powered and electric cars are often described as “smartphones on wheels.” They’re connected to the internet through infotainment systems, mapping services, and other cloud-based technologies, making them more vulnerable to cyber threats. The proposed ban would target software and hardware used for vehicle communication and automated driving systems, which officials believe could be exploited by foreign entities to track vehicles or disable critical systems.

The Biden administration’s investigation into these cybersecurity risks began earlier this year, following concerns about Chinese carmakers and suppliers dominating the electric vehicle (EV) market and connected car technology. China has become a world leader in the electric vehicle sector, with companies like BYD surpassing Tesla in electric car sales last year. 

This new move also follows a broader economic strategy targeting Chinese imports. In May 2024, President Biden announced a dramatic tariff increase on a range of Chinese goods, including electric vehicles. The tariff rate was raised from 25% to 100%, signaling an escalating effort to protect U.S. industries from foreign competition, particularly in sectors like automotive and technology.

How will this affect the auto industry?

The ban, expected to be introduced in phases starting in 2027 for software and in 2029 for hardware, would effectively block the import and sale of vehicles using Chinese and Russian technologies. This includes autonomous driving systems, Bluetooth devices, satellite connectivity, and other wireless communication technologies.

The auto industry is expected to resist the proposed changes, as the changes could disrupt existing supply chains. Major carmakers like General Motors, Toyota, and Volkswagen have already raised concerns about the feasibility of replacing critical systems with alternatives in such a short timeframe.

Still, the Commerce Department gives manufacturers a window to adjust, with a 30-day public comment period before finalizing the rule. By January 2025, the ban could be officially implemented, forcing automakers to seek alternatives.

Impact on consumers

For consumers, the effects of this proposed ban could be significant. In the short term, there may be concerns about the availability and price of new vehicles as manufacturers scramble to replace the affected technology. The cost of vehicles could rise as automakers turn to more expensive U.S.-based or non-Chinese suppliers to meet the new requirements.

However, the ban also aims to safeguard consumers' data from potential foreign surveillance or cyberattacks. With the rise of connected vehicles, there is an increased risk of hacking or remote access, which could compromise drivers' safety and privacy. The government aims to mitigate these risks by blocking Chinese and Russian software from U.S. vehicles.

What’s next?

The Commerce Department expects to finalize the ban by early 2025, giving the public and automakers 30 days to comment on the proposed rules. The regulations would apply to all vehicles sold in the United States, but agricultural and mining vehicles would be exempt. 

Consumers should know that changes are on the horizon for their vehicles, particularly as automakers adjust to the new rules. In the long run, the hope is that these changes will lead to more secure and reliable cars on U.S. roads.