Electric vehicles made in China could be banned in the US starting in 2027 if a proposed new rule passes. The US Bureau of Industry and Security (BIS) has published a notice of proposed rulemaking that would ban the import and sale of vehicles and parts from manufacturers with a “sufficient connection” to the People’s Republic of China or Russia.
The proposed rule targets specific elements of electric vehicle (EV) hardware and software and the potential malicious use of the information and data they require. The Vehicle Connectivity System (VCS) allows cars to communicate externally via Bluetooth, cellular, satellite, or Wi-Fi modules, while the Automated Driving System (ADS) allows a car to drive without a driver. The ban would include all components imported for use in U.S. cars, as well as those installed in vehicles from China and Russia.
If it passes without amendment, the only vehicles exempt would be those related to agricultural or mining purposes. And while a senior Biden administration official says “(Chinese) and Russian automakers do not currently play a significant role in the U.S. auto market,” they believe it is a necessary preemptive strike given the sophistication of today’s electric cars and their growing centrality.
A White House statement said: “These technologies include computer systems that control vehicle movements and collect sensitive data from drivers and passengers, as well as cameras and sensors that enable automated driving systems and capture detailed information about U.S. infrastructure.”
“While connected vehicles provide many benefits, the data security and cybersecurity risks posed by software and hardware components from the People’s Republic of China and other countries of concern are also clear,” said National Security Advisor Jake Sullivan.
Only this month is the US raises tariffs on Chinese electric cars imports up to 100%, and the rule comes as China’s auto exports have soared, rising more than 30% in the first six months of 2024 according to the Associated Press.
While the proposal is still subject to change, if passed in its current form, the new software ban would take effect on all 2027 model year vehicles, with the hardware provisions taking effect starting in 2030 model year.
More privacy, fewer options
This new rule can be seen as a way to protect American production of electric vehicles (and the significantly more expensive vehicles), but also as a way to protect the privacy and security of Americans.
Despite the high tariffs, cars like the Volvo EX30 are undercutting the Tesla Model Y in some markets, and according to The AtlanticThe average price of an EV in China is about $18,000 cheaper than in the United States. Lei Xing, former editor-in-chief of China Auto Review, says: “If the 100 percent tariffs on Chinese-made EVs were a wall, the proposed ban on connected vehicles would be a death sentence for China EV Inc.”
That’s not to say these new rules are without merit. With cameras, GPS tracking, microphones and other technologies embedded in modern electric vehicles, “it doesn’t take much imagination to see how a foreign adversary with access to this information could pose a serious risk to both our national security and the privacy of American citizens,” said Commerce Secretary Gina Raimondo.
However, Raimondo’s speculation that China will cause chaos by shutting down “hundreds of thousands of Chinese connected vehicles” is unlikely to materialize anytime soon, given the insignificant role that Chinese and Russian automakers play in the U.S. According to Statista As of August 2024, Tesla had an 82.5% market share of the U.S. electric vehicle market, while U.S. brands Ford (3%) and Chevrolet (2.9%), South Korea’s Hyundai (2.2%) and Germany’s BMW (1.8%), Volkswagen (1.7%) and Mercedes-Benz (1.4%) held only 4.5% of the shares held by Nissan, Kia and other manufacturers.
This is clearly not the first tech-related legal clash between China and America. In 2022, equipment from Huawei and ZTE was banned, and Bytedance is still fighting TikTok’s forced divestment in court.
While the potential for malicious use of US data is certainly something to watch out for, the impact on EV prices in the US could be significant if this proposal becomes law. So while this rule would ensure that citizens remain protected from “countries of concern” using their data, they would also miss out on some of the world’s cheapest electric vehicles.