Electric vehicles made in China could be banned in the United States as early as 2027 if a new proposed rule is approved. The U.S. Bureau of Industry and Security (BIS) has published a Notice of Proposed Rulemaking that would ban the import and sale of vehicles and components made by manufacturers “with a sufficient nexus” to the People’s Republic of China or Russia.
The proposed rule focuses on specific elements of electric vehicle (EV) hardware and software, and the potentially 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 operate without a driver. This ban would cover all parts imported for use in cars manufactured in the United States, as well as those incorporated into vehicles from China and Russia.
If approved without changes, the only vehicles that would be exempt would be those related to agricultural or mining purposes. And, while a senior Biden administration official says that “[Chinese] “And Russian automakers currently do not play a significant role in the U.S. auto market,” they believe, a necessary preemptive strike given the sophistication of today's electric cars and their growing centrality.
A White House statement clarifies that “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 U.S. infrastructure.”
“While connected vehicles offer many benefits, the data security and cybersecurity risks posed by software and hardware components originating from the People's Republic of China and other countries of interest are equally clear,” said National Security Adviser Jake Sullivan.
It was only this month that the United States raised tariffs on Chinese electric vehicle imports to 100%, and the move comes at a time when China's auto exports have boomed, rising more than 30% in the first six months of 2024 according to the Associated Press.
While the proposal could still be subject to changes, if approved in its current state, the new software ban would take effect on all vehicles starting with the 2027 model year, and the hardware provisions would begin with the 2030 model year.
More privacy, fewer options
This new rule can be seen both as a way to protect American EV manufacturing (and its considerably more expensive vehicles) and as a way to protect the privacy and security of Americans.
Despite the high tariffs, cars like the Volvo EX30 are priced lower than Tesla’s Model Y in some markets, and according to The Atlantic, the average price of an electric vehicle in China is about $18,000 cheaper than in the US. Lei Xing, former editor-in-chief of China Auto Review, says: “If 100% tariffs on Chinese-made EVs were a wall, the proposed ban on plug-in vehicles would be a death knell for China EV Inc.”
That’s not to say these new rules aren’t without merit. With cameras, GPS tracking, microphones and other technology in modern electric vehicles, “it doesn’t take much imagination to understand 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 come true in the near future, given the insignificant role played by Chinese and Russian automakers in the United States. According to Statista, as of August 2024, Tesla accounts for 82.5% of the US EV market, followed by American-owned Ford (3%) and Chevrolet (2.9%), South Korean-owned Hyundai (2.2%) and BMW (1.8%), Volkswagen (1.7%) and Mercedes-Benz (1.4%), leaving just 4.5% split between Nissan, Kia and other manufacturers.
This is obviously not the first tech-related legal showdown between China and the US. In 2022, Huawei and ZTE equipment were banned, and Bytedance is still fighting TikTok’s forced divestment in court.
While the potential for malicious use of US data is something to consider, if this proposal becomes law, the impact on EV prices in the US could be significant. So, while this rule will allow citizens to remain protected from having their data used by “countries of concern,” they will also miss out on some of the cheapest electric vehicles in the world.
