Proposed Rulemaking Could Ban Sale of Chinese EVs Assembled in 3rd Countries

President Joe Biden said a regulatory effort from the Commerce Department to curtail the use of software, sensors and cameras in automobiles made by Chinese firms is one of the actions the administration is taking "to make sure the future of the auto industry will be made here in America with American workers."

The Bureau of Industry and Security released an advance notice of proposed rulemaking Feb. 29 on information technology used in connected vehicles to determine whether technologies used to navigate, avoid collisions, charge electric vehicles and connect cell phones to cars' infotainment systems pose an "unacceptable risk to the national security of the United States or the security and safety of United States persons" when those technologies are made by firms in a "foreign adversary," which includes China.

The U.S. already has 27.5% tariffs on Chinese-made automobiles, but, if the Commerce Department recommends restrictions, this could ban the sale of cars assembled in Europe, Mexico or Brazil, if the automaker is Chinese.

"China is determined to dominate the future of the auto market, including by using unfair practices. China’s policies could flood our market with its vehicles, posing risks to our national security. I’m not going to let that happen on my watch," Biden said Feb. 29 in announcing the proposed rulemaking.

Rep. Elissa Slotkin, D-Mich., tweeted that "this is an important step for U.S. national security and for Michigan’s auto industry."

A fact sheet from the White House said that the cameras in cars regularly "record detailed information on U.S. infrastructure," and that modern cars interact directly with critical infrastructure and can be disabled remotely.

"The [Commerce] Department will consult closely with industry, U.S. allies and partners, and other stakeholders throughout the regulatory process to ensure any actions maximally protect U.S. national security, while minimizing unintended consequences."

Background in the notice of proposed rulemaking noted that private companies subject to Chinese jurisdiction have to provide the government data, logical access and encryption keys, and can be compelled to install backdoors or bugs in equipment that "create security flaws easily exploitable by PRC authorities."

BIS said connected vehicles are cars and trucks that connect with cell phones or satellites to do navigation, communicate the location of the car, offer remote access or control, have wireless software updates, or have the ability to call for roadside assistance in the vehicle.