No more ‘spy cars’: US bans Chinese and Russian tech in vehicles

Outgoing US President Joe Biden presented a farewell gift this week. He announced sweeping new restrictions, banning Chinese and Russian technology in connected vehicles over national security concerns. The new regulations will prohibit the sale, import, and use of hardware, software, and complete vehicles incorporating such technologies in the US.

The White House stated that restrictions on software will take effect with the 2027 model year, while hardware restrictions will apply starting in 2030. These measures aim to “safeguard America from national security risks associated with the exploitation of U.S. connected vehicle supply chains by foreign adversaries,” according to the official statement.

Wheeled cyberattacks?

Gina Raimondo, the outgoing Secretary of Commerce, emphasized the growing risks posed by connected vehicle technologies, which she described as “computers on wheels.” With built-in cameras, microphones, GPS, and internet connectivity, these systems could be exploited for espionage or cyberattacks. China upheld a similar measure restricting Tesla cars in military areas back in 2021 over security issues.

The U.S. rules stipulate that automakers must exclude all components or software from suppliers with ties to China or Russia. Exceptions are limited, with specific rules for buses and trucks to be developed later.

Impact on the sector

Manufacturers with ties to Chinese companies will need to readress their strategies. For instance, Polestar, which produces cars in South Carolina but is controlled by China’s Geely, faces a complex path forward. Similarly, Waymo, Google’s self-driving vehicle subsidiary, plans to use modified vehicles from Chinese automaker Zeekr, though it intends to replace the original electronics with its propriety systems.

Tesla, which operates a major factory in Shanghai and relies heavily on the Chinese market, could also face difficulties navigating the evolving regulatory landscape. CEO Elon Musk, a close adviser to President-elect Donald Trump, has previously criticized tariffs on Chinese imports, arguing that they distort market dynamics.

China reacts

China has denounced the decision, calling it a baseless attack on its companies. A Chinese Foreign Ministry spokesperson stated that the ban disrupts economic cooperation and violates market principles, promising countermeasures to protect its interests.

The move follows a series of U.S. actions targeting Chinese technology. In September, the Biden administration imposed 100% tariffs on Chinese electric vehicles and restricted exports of advanced semiconductors critical to artificial intelligence development.

Counterproductive measures?

The connected vehicle market, with its integration of autonomous driving technologies and data-driven features, has become a focal point for national security concerns. The Biden administration warns that foreign control of such systems could enable unauthorized access to sensitive data or even remote manipulation of vehicles.

Despite Musk in an advisory role, President-elect Trump, returning to office on January 20, is expected to continue this hardline stance on China. Trump has already proposed additional tariffs on Chinese imports, potentially ranging from 60% to 100%, deepening protectionist measures.

These battles could prove counterproductive for electric vehicle adoption, as China controls roughly 75% of worldwide battery production and 80% of the refining capacity of critical materials.