US Commerce Department targets Chinese vehicle software with stringent new rules

The Commerce Department of the US is going to present proposed rules related to connected vehicles next month, aiming to limit the use of some software produced by China and other nations viewed as hostile adversaries, a senior official said Tuesday.

"We're looking at a few components and some software - not the whole car - but it would be some of the key driver components of the vehicle that manage the software and manage the data around that car that would have to be made in an allied country," said export controls chief Alan Estevez at a forum in Colorado.

Back in May, Commerce Secretary Gina Raimondo announced that her department would be in a position to publish proposed rules on Chinese-connected vehicles this fall. The Biden administration is looking into "extreme action" against Chinese-connected vehicles in America, including an outright ban or restrictions, following the probe ordered in February by the administration into the national security risks from Chinese vehicle imports.

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The comments by Alan Estevez, Commerce under secretary for industry and security, are the most explicit to date from the administration on its plans for Chinese vehicles, which have been a source of intense concern.

Connected vehicles come embedded with network hardware that allows internet access and endows devices inside and outside a vehicle with shared access to data. Estevez said Tuesday that this threat from these vehicles is very serious.

"A car is a very scary thing. Your car knows a lot about you. Your car probably gets a software update, whether it's an electric vehicle or an autonomous combustion engine vehicle," he said.

"A modern car has a lot of software in it. It's taking lots of pictures. It has a drive system. It's connected to your phone. It knows who you call. It knows where you go. It knows a lot about you."

The Chinese foreign ministry earlier called on the US "to respect the laws of the market economy and principles of fair competition." The ministry explained that the fact behind the popularity of Chinese cars flows from withstanding fierce market competition and technological innovation.

Raimondo said in May "you can imagine the most catastrophic outcome theoretically if you had a couple million cars on the road and the software were disabled."

At present, very few light-duty vehicles built in China are imported to the United States, though the Biden administration has announced significant tariff increases on Chinese electric vehicles and other goods to go into effect by August 1.

Upcoming regulations and tariffs foreshadow the turning concerns of the US government toward issues of national security and technological competition. The automobile industry and international trade relations will likely be in a dilemma once the administration pushes through these measures.