US effectively bars Chinese & Russian cars and trucks
The software bans will come into force with the model year 2027 (i.e., January 2026), and the hardware ban will come into force from the model year 2030. Moreover, starting with the model year 2027, Chinese companies are no longer allowed to sell vehicles in the US, even if said vehicles are manufactured locally. The White House officially states: “The rule also includes a prohibition on the sale of connected vehicles in the United States by entities who are owned by, controlled by, or subject to the jurisdiction or direction of the PRC or Russia – even if those vehicles were made in the United States.”
There are exceptions, however. For instance, according to Reuters, the ban does not affect software developed in China before the rule as long as it is not maintained by a Chinese firm. That means US companies could essentially continue to import vehicles made in China. When the rue was first proposed in September last year, it seemed that virtually all vehicles built in China would be affected and would no longer be allowed to be sold in the US, even if they were built in China by General Motors or Ford.
Due to the punitive tariffs of 100 per cent, Chinese electric vehicles already face a very high barrier to market entry in the US. In practice, the vehicles are virtually forced off the market in the US. This hurdle could be circumvented by considering production in the NAFTA region, for example, in Mexico. In other words, due to the extremely low US market share, the proposed new regulation on smart cars would hardly have any impact.
The US first started to look into banning software and hardware from China for connected cars in July last year. The current US Department of Commerce then officially proposed the ban a few months later, which has now been signed into law. The reason:
“At the same time, foreign adversary involvement in the supply chains of connected vehicles poses a significant threat in most cars on the road today, granting malign actors unfettered access to these connected systems and the data they collect,” the press release from the White House states.
“It’s really important because we don’t want two million Chinese cars on the road and then realize … we have a threat,” Commerce Secretary Gina Raimondo told Reuters in an interview a few days ago.
At this point, the rule applies only to cars, not to commercial vehicles. That means BYD, for example, can continue assembling electric buses in California.
However, the current US administration does emphasise that it intends “to pursue a rulemaking to address foreign adversary involvement in the supply chain of commercial connected vehicles, or vehicles with a gross vehicle weight rating of over 10,000 pounds”, for same reason it has banned connected cars. As the inauguration of President-elect Donald Trump is just days away, such a ban will be up to him and his administration.
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