Following this announcement, the U.S. Department of Commerce issued a notice of proposed rulemaking (NPRM). If finalized, this rule would ban the sale and import of connected vehicles and components that incorporate specific technologies from China and Russia. These proposed regulations come after public feedback on earlier notices regarding the national security risks of foreign technologies in connected vehicles.
Connected vehicles enhance safety and navigation but also introduce new vulnerabilities. They often contain advanced systems that control movement, collect sensitive data, and use cameras for automated driving. The Department of Commerce has raised alarms that these technologies could be exploited by foreign actors to gather data on critical infrastructure or disrupt vehicle operations.
The proposed rules specifically target “vehicle connectivity systems” (VCS), such as Bluetooth and Wi-Fi, and “automated driving systems” (ADS) that enable driverless vehicles. The NPRM aims to prohibit the import and sale of VCS and ADS technologies developed by entities linked to China or Russia.
The announcement is the next step in a process President Biden announced in February, 2024. This NPRM incorporates public feedback submitted in response to the Department’s advance notice of proposed rulemaking (ANPRM) issued on March 1, 2024, which sought public comment on the national security risks associated with certain technologies used in connected vehicles.
Connected vehicles provide many benefits — from promoting vehicle safety to assisting drivers with navigation — but they also pose new and growing threats. These technologies include computer systems that control vehicle movement and collect sensitive driver and passenger data as well as cameras and sensors that enable automated driving systems and record detailed information about American infrastructure. Now more than ever, vehicles are directly connected into our country’s digital networks.
As the Department of Commerce has found, vehicles’ increasing connectivity creates opportunities to collect and exploit sensitive information. Certain hardware and software in connected vehicles enable the capture of information about geographic areas or critical infrastructure, and present opportunities for malicious actors to disrupt the operations of infrastructure or the vehicles themselves. Commerce has determined that certain technologies used in connected vehicles from the PRC and Russia present particularly acute threats. These countries of concern could use critical technologies within our supply chains for surveillance and sabotage to undermine national security.
Restrictions on VCS and ADS software will start with vehicles in Model Year 2027. Hardware restrictions will take effect for Model Year 2030. The proposal also considers exemptions to prevent unnecessary disruptions, particularly for smaller manufacturers.
This NPRM is a significant part of the Administration’s strategy to strengthen U.S. automotive supply chains against foreign threats. In addition, President Biden has increased tariffs on Chinese electric vehicles and linked tax incentives for EVs to North American assembly.
The Biden-Harris Administration is seeking ongoing input from industry leaders and international partners to refine the proposed rule, aiming to mitigate security risks while minimizing impacts on the automotive sector.
In May of this year, President Biden directed an increase from 25% to 100% on the tariff rate on Chinese electric vehicles under Section 301. The Inflation Reduction Act tied eligibility for the $7,500 EV tax credit to final assembly in North America and sourcing key battery minerals and components from the United States or trade partners. These prior actions underscore the Administration’s commitment to ensuring that the American auto industry is leading in quality and innovation, and that U.S. automakers have the opportunity to compete on a level playing field as they develop the next generation of automobiles.