Chinese cars are close to a US ban – and that could make EVs a lot more expensive
- Finalized rules ban Chinese or Russian-made software and hardware
- Legislation prevents Chinese companies testing autonomous vehicles
- Measures will be phased in, beginning with model year 2027 vehicles
With an impending departure from the White House on the 20th of this month, the Biden administration has made one of its final decisions, which looks set to have a massive impact on electric vehicle sales in North America.
In September last year, the US Commerce Department proposed a blanket ban on the sale of connected hardware and software in the automotive space, as well as other forms of consumer technology, such as drones, citing a threat to national security.
This week, the administration is finalizing rules that will effectively ban the sale of both Chinese and Russian-made trucks and cars in the US, as it looks to protect national security interests and stave off the threat of cheaper Chinese models impacting domestic automakers.
Commerce Secretary Gina Raimondo told Reuters in an interview: “It’s really important because we don’t want two million Chinese cars on the road and then realize … we have a threat.”
Essentially, the ban covers any piece of software or hardware derived from China (or Russia) that connects a modern vehicle to the wider world, including GPS used by sat nav systems, Wi-Fi, Bluetooth, satellite and components for cellular data connections.
Add this to the sheer weight of camera and sensor technology, both inside the vehicle and out, as well as microphones for voice activated software, and Commerce Secretary Gina Raimondo believes that any “foreign adversary” with access to the data collated by the components could “pose a serious risk to both our national security and the privacy of U.S. citizens,” according to a report published by the Bureau of Industry and Security.
The decision will have a massive impact on electric vehicle uptake in North America, seeing as it will affect any manufacturer that leans on Chinese suppliers for any of the aforementioned software and hardware, with some marques potentially disappearing from sale completely.
Volkswagen, GM, Toyota and Ford all warned that the complexity of the global automotive supply chain will lead to delays and disruption, as those brands looked to find new parts suppliers in order to adhere to the proposed rules.
Polestar, which is owned by Chinese company Geely, claimed that the ban could effectively put it out of business, as it would deny it access to the US market despite building a large proportion of its cars in Ridgeville, South Carolina, according to an article by Kelly Blue Book in October last year.
The legislation will also slow the progress of autonomous vehicle and ride-hailing service development, banning any Chinese firms from testing on American roads but also forcing some of the biggest names in the driverless game to reconsider the hardware and software used in their vehicles.
Waymo, for example, is planning on introducing models produced by the Geely-owned Zeekr brand for its latest robotaxi, as it moves from the Jaguar I-Pace used in much of its testing to the more spacious Zeekr M MPV with improved battery range.
Analysis: Kiss goodbye to competition
Although it is difficult to argue against the potential national security threat, it’s also hard to ignore the fact that there is so much connected consumer technology in use in North America that hails from China – so why come down so hard on the automotive industry?
One theory is that the next generation of highly autonomous and connected vehicle will harvest such a weight of data, from personal driver details to location and live video feeds, that your robotic vacuum cleaner pales into insignificance when it comes to its spying abilities.
But it still seems like a harsh ruling on the growing number of respectable Chinese brands that now produce highly competitive EVs, as well as the average American consumer, who will now face a more limited and potentially poorer choice of future vehicle.
Those companies that adhere to the new rules will also find that they have carte blanche to set pricing, rather than be forced to compete with the cheaper competition. Electric motoring could get a lot more expensive in the US as a result.
The software ruling is destined to apply to 2027 model year vehicles, while rules on hardware are set to be imposed by 2029, leaving the automotive industry some time to apply for exemptions or extensions to the legislation.
Tesla’s CEO, Elon Musk, hit out at Biden’s plans late last year, stating that they would create “unneeded regulatory burdens” on Western carmakers, many of which are already struggling to keep up with competition from China, according to The Telegraph.
Musk, one of Donald Trump’s largest financial backers, now has close ties with the President Elect, meaning that many of Biden’s most recent rulings could potentially be reversed or adapted anyway.
That’s important, seeing as Tesla both manufactures in China and uses Chinese-derived technology in many of its vehicles.
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Finalized rules ban Chinese or Russian-made software and hardware Legislation prevents Chinese companies testing autonomous vehicles Measures will be phased in, beginning with model year 2027 vehicles With an impending departure from the White House on the 20th of this month, the Biden administration has made one of its final…
