The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) published a notice of proposed rulemaking Monday that would ban the sale or import of Chinese and Russian connected vehicles that integrate specific software and hardware, or sell those components separately, according to a BIS press release. 

It focuses on hardware and software integrated into the Vehicle Connectivity System (VCS) and software integrated into the Automated Driving System (ADS). 

“These are the critical systems that, through specific hardware and software, allow for external connectivity and autonomous driving capabilities in connected vehicles,” the release says. “Malicious access to these systems could allow adversaries to access and collect our most sensitive data and remotely manipulate cars on American roads. The proposed rule would apply to all wheeled on-road vehicles such as cars, trucks, and buses, but would exclude vehicles not used on public roads like agricultural or mining vehicles.”

The release says that certain technologies originating from China or Russia present an “undue risk” to the U.S. infrastructure and consumers. It calls the rule a “proactive measure” to protect national security and drivers. 

“Cars today have cameras, microphones, GPS tracking, and other technologies connected to the internet,” said U.S. Secretary of Commerce Gina Raimondo, in the release. “It doesn’t take much imagination to understand how a foreign adversary with access to this information could pose a serious risk to both our national security and the privacy of U.S. citizens. To address these national security concerns, the Commerce Department is taking targeted, proactive steps to keep PRC and Russian-manufactured technologies off American roads.” 

According to the release, the rule would ban any vehicle that has the technology, even if made in the U.S. It would take effect for software model year 2027. Hardware bans would take effect for model year 2030, or on Jan. 1, 2029, for units without a model year. 

BIS will take public comment on the proposed rule for 30 days after the publication date. The rule was published Sept. 23. 

The Alliance for Automotive Innovation (Automotive Innovators) released a statement from President and CEO John Bozzella that says automakers share concerns about national security risks with automakers. However, he says the timeline could be problematic for some automakers. 

“Important context: there’s actually very little technology — hardware or software — in today’s connected vehicle supply chain that enters the U.S. from China,” Bozzella says in the statement. “But this rule will require auto manufacturers, in some cases, to find alternate suppliers.

“I’ve said this in other contexts but it applies here too: you can’t just flip a switch and change the world’s most complex supply chain overnight. It takes time. (See: China and battery critical minerals).”

Bozzella said the timeline in the proposed rule will allow some auto manufacturers to make the required transition but it could be difficult for others. 

“This was a thoughtful, thorough, and consultative process by the Bureau of Industry and Security,” Bozzella said. “We’ll provide additional perspective as they develop a final rule that reflects industry realities and achieves our shared national security goals.” 

Earlier this month, the U.S. House of Representatives approved a bill that would ban tax credits for electric vehicles (EVs) that use Chinese battery technology

H.R. 7980, named the “End Chinese Dominance of Electric Vehicles in America Act of 2024,” passed the House 217-198. It was received by the Senate and passed to the Committee on Finance on Sept. 16. 

According to the South China Morning Post (SCMP), the bill restricts tax credits for vehicles using “battery technology licensed from China” if the deal is more than $5 million. 

The Inflation Reduction Act already banned tax credits for EVs using batteries made in China, SCMP says. 

Bozzella released a statement at the time that said federal greenhouse gas emissions standards and “aggressive” EV sale targets would need to be rolled back if the bill passes. 

“Why? Because those standards and targets (we called them the ‘ragged edge of achievable’) were based in part on the availability of consumer incentives in the Inflation Reduction Act,” Bozzella said. “Remember, to even qualify for those incentives – vehicles need to be built in North America and can‘t have battery components or critical minerals from China starting in 2025.

“If the incentives go away now? The automotive industrial base faces a serious economic and national security risk from China, the U.S. becomes less competitive, and the rug is pulled out from consumers.”

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