Biden Administration's New Rule on Connected Vehicles from China and Russia

The U.S. Department of Commerce has introduced a significant rule that prohibits the sale or import of connected vehicles from China and Russia, primarily due to concerns regarding national security. This rule is part of a broader effort to safeguard American interests from foreign technologies deemed risky.

According to National Economic Advisor Lael Brainard, China is making strides to dominate the future automotive market. However, vehicles equipped with technologies developed by foreign adversaries pose risks, including potential misuse of sensitive data and interference by malicious entities. Brainard reiterated that the new ruling aims to strengthen the security of the American automotive industry.

Implementation of software bans is set for the 2027 model year and hardware prohibitions will take effect in 2029. Notably, this regulation does not encompass Chinese software developed before the enforcement of these new rules, on the condition that no Chinese firm interacts with that software.

The final ruling also contains exemptions for vehicles weighing over 10,000 pounds. This allows the Chinese manufacturer BYD to maintain its ability to assemble electric buses in California.

Currently, several Chinese autonomous vehicle companies hold active permits to test their technology in California. Notable among them are Baidu-owned Apollo Autonomous Driving and WeRide, both of which are permitted to test autonomous vehicles without safety drivers. In contrast, Pony AI, which has recently entered the public market, is authorized to test its vehicles only with a safety driver. In their initial public offering documentation, Pony AI acknowledged a slight risk of halting its minimal robotaxi testing in the U.S., noting that these activities contributed less than 1% to its total revenues for 2023 and the first half of 2024.

Representatives from the California Department of Motor Vehicles have indicated that they will comply with the Department of Commerce's directives when it comes to enforcing restrictions on Chinese connected vehicle technologies. It remains uncertain whether the DMV will rescind testing permits granted to these companies due to the announcement of the final ruling.

Biden, China, cars