The Biden administration unveiled a new proposal to ban Chinese connected-car technology in the U.S. earlier this week, a move aimed at protecting the domestic auto industry from the rising dominance of Chinese electric vehicles (EVs).
Unlike previous tariffs and restrictions, this ban will apply to all vehicles that incorporate Chinese hardware or software, even if the cars are built outside of China.
This broad scope affects cars manufactured in other countries, such as Mexico and Europe, where Chinese automakers like BYD are planning to establish production plants. The U.S. had already imposed 100% tariffs on Chinese-made EVs and excluded vehicles with Chinese components from a $7,500 consumer EV subsidy.
"This is a powerful statement," said Michael Dunne, a consultant specialising in the Chinese auto industry. "After high tariffs, U.S. officials reevaluated the situation and concluded that further measures were necessary."
The ban could serve as a significant trade barrier, especially for Chinese automakers like BYD, which recently announced plans for a Mexico plant.
While the company claims the plant will serve the local market, U.S. trade groups are concerned that Chinese EVs could flood the U.S. market and disrupt domestic manufacturers, potentially causing what they call an "extinction-level event" for American automakers.
The proposal also targets Chinese software and autonomous driving technology, effectively protecting U.S. companies like Tesla from fierce Chinese competition in sectors such as robotaxis.
Tesla’s CEO, Elon Musk, has increasingly bet the company’s future on its autonomous technology, which has faced stiff competition from Chinese firms.
Security and Economic Concerns
Biden administration officials framed the ban as a necessary step to safeguard national security and protect the U.S. economy. China’s EV sector, heavily subsidised by its government, has emerged as a global leader in both battery and automotive software technologies. The administration is concerned that allowing Chinese technology in U.S. vehicles could pose a risk of espionage or remote control from abroad.
"There are valid fears that drivers' privacy could be compromised or vehicles could be remotely accessed from overseas," said Lael Brainard, a White House economic advisor. "We are also very focused on ensuring fair competition for our domestic manufacturers."
The ban would take effect in stages, with software prohibited in 2026 for 2027 model year vehicles, and hardware banned by 2030. The Biden administration aims to finalise the rules before the president leaves office in 2025.
However, China has warned that it will defend its interests in response to the proposed ban. "China opposes the U.S. generalisation of national security concerns and discriminatory practices against Chinese companies," said Foreign Ministry spokesperson Lin Jian.
The ban has garnered bipartisan support in the U.S. Congress, where lawmakers have raised security concerns about Chinese autonomous-vehicle technology being tested in the country.
Earlier this year, the Biden administration added China-based Hesai Group, a supplier of lidar technology for autonomous driving, to a list of companies accused of working with Beijing’s military. Hesai, which supplies major companies like General Motors' Cruise and Amazon’s Zoox, has denied the allegations.
Electric vehicles and trade policy have also emerged as major themes in the 2024 U.S. presidential campaign. Republican candidate Donald Trump has criticised Biden’s EV policies, while Brainard noted that the administration aims to ensure Americans buy U.S.-made electric cars, not Chinese ones.
"We want Americans to choose electric vehicles, but we want those vehicles to be American-made, not imported from China," Brainard said.
Meanwhile, Canada is considering adopting a similar ban on Chinese connected-car technology. Canadian Finance Minister Chrystia Freeland confirmed on Tuesday that the country is "absolutely" looking into a ban.
