Auto supply chains are famously complex. Why not throw in another twist?
A US Commerce Department proposal that would ban the sale or import of connected and autonomous vehicles made with Chinese and Russian software and hardware could do just that.
In announcing the proposal last month, the department’s Bureau of Industry and Security characterized the move as “a proactive measure designed to protect our national security and the safety of US drivers.”
“Cars today have cameras, microphones, GPS tracking, and other technologies connected to the internet,” Commerce Secretary Gina Raimondo said in a statement. “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 US citizens.”
Commerce officials said they are trying to get ahead of Chinese technology being used to surveil American residents or even threaten critical infrastructure. Biden administration officials have also cited economic competitiveness amid concerns about low-priced, high-tech Chinese EVs hitting the US market and undercutting the domestic manufacturers that the Biden administration has sought to boost via its climate and economic agenda.
If implemented, the software ban would take effect for model year 2027 vehicles. The hardware rules would take effect “for model year 2030, or January 1, 2029 for units without a model year.”
The ban would apply to all vehicles on public roads, and even to vehicles made in the US. Commerce officials reportedly hope to finalize the rule before President Biden leaves office.
In a statement following the proposal’s release, John Bozzella, CEO of the Alliance for Automotive Innovation, which represents much of the domestic auto industry, noted that “there’s actually very little technology—hardware or software—in today’s connected vehicle supply chain that enters the US from China.”
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Still, he said the rule would force automakers “in some cases to find alternate suppliers.” And the lead time “may be too short” for some.
“You can’t just flip a switch and change the world’s most complex supply chain overnight,” he said. “It takes time.”
Kevin Mixer, a senior director analyst for Gartner who previously served as a chief information officer at GM, agreed that the policy likely would require US automakers to tweak their sourcing strategies for certain components. And in his view, there needs to be more clarity on what, exactly, the ban encompasses.
But it could be helpful to domestic manufacturers if they take advantage of what amounts to a ban on Chinese vehicles in the US. The US EV industry has been grappling with growing competitive pressures from China even as demand for EVs slows down.
“I think it’s going to force [domestic automakers to] advance the capabilities and bring the cost down,” Mixer said. It’s crucial, though, that US automakers don’t slow down, he added—and that innovation isn’t stifled.
The proposed rule comes after the Biden administration announced a more than 100% tariff on Chinese EV imports. Europe quickly followed suit.
China has emerged as a leader in the global EV market, and Chinese EV makers are establishing footholds in other markets, including Europe and Mexico.
Ford CEO Jim Farley has been vocal about his concern that China could leave the US auto industry in the dust. During a trip to China earlier this year, Farley described what he observed there as an “existential threat” to companies like Ford, per the Wall Street Journal.
Tesla CEO Elon Musk has expressed similar sentiments: “The Chinese car companies,” he said last year, “are the most competitive car companies in the world.”