The US government is preparing its latest strategy to protect domestic automotive manufacturing. In May, President Joe Biden imposed new tariffs of 100 percent aimed at certain Chinese automakers.
Now, the US Commerce Department is poised to implement a de facto ban on most Chinese vehicles by preventing Chinese connected car software and hardware from being used on American roads, as reported by Reuters.
The reasoning behind this move? National security concerns. “When foreign adversaries create software to enable connectivity in vehicles, it opens the door to surveillance and remote control, which poses risks to the privacy and safety of Americans on the road,” stated Commerce Secretary Gina Raimondo.
“In a worst-case scenario, a foreign adversary could simultaneously shut down or take control of all vehicles operating in the United States, leading to crashes and blocked roads,” stated Secretary Raimondo.
This scenario mirrors what was depicted in Fate of the Furious—which gave me a headache—and was portrayed more effectively in Leave the World Behind.
Beyond Hollywood, the notion that connected cars pose security risks is not a concept invented by the US government.
In fact, back in 2021, China prohibited Tesla vehicles from accessing military bases and other state-controlled sites due to concerns raised by officials about the extensive data collection capabilities of Tesla’s camera-equipped vehicles.
Those concerns were likely justified, as it was later revealed that Tesla employees had been sharing “sometimes highly invasive videos and images” from customer cars via the company’s messaging system for several years.
Moreover, domestic automakers haven’t exactly maintained ethical practices regarding data from their connected vehicles.
Earlier this year, General Motors was caught selling user data from its OnStar services to data brokers, which then supplied this information to insurance companies, leading to a spike in drivers’ insurance premiums.
In response, GM has committed to refraining from sharing customer data with brokers in this way.
While national security issues were highlighted by the Commerce Department in this instance, this action should be viewed as part of a broader strategy to hinder or prevent the influx of heavily subsidized Chinese vehicles into the US market.
The Chinese government has been providing its automakers with billions of dollars annually in direct subsidies, enabling these companies to offer their vehicles overseas at exceptionally low prices.
Lawmakers from both parties have advocated for a ban on Chinese electric vehicles, while the US government has urged Mexico not to provide incentives to Chinese automakers seeking to establish factories in the country.
“China is attacking global markets with a surge of auto exports during a period of overcapacity. We have encountered this strategy before, during the China shock of the early 2000s, which negatively impacted our manufacturing communities,” remarked Lael Brainard, an economic adviser at the White House.
Given that nearly all new cars produced today feature some level of connectivity, the latest proposal from the Commerce Department would effectively prohibit the sale of all Chinese vehicles in the US.
However, Chinese automakers will have the option to apply for exemptions. This ban is set to take effect for software in model year 2027 (which corresponds to the calendar year 2026) and for hardware in model year 2030.
Nonetheless, the interconnectedness of global supply chains suggests that other original equipment manufacturers (OEMs) may also have to respond.
“Currently, there is minimal technology—either hardware or software—coming from China in today’s connected vehicle supply chain.
However, this regulation will, in some instances, compel automakers to seek alternative suppliers,” explained John Bozzella, president and CEO of the Alliance for Automotive Innovation.
“I’ve mentioned this in different situations, and it’s relevant here as well: transforming the world’s most intricate supply chain cannot happen instantly.
It requires time. According to Bozzella, the lead time outlined in the proposed rule will enable some automakers to adapt as needed, but it could be insufficient for others.”
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