Imported Chinese Hardware for Advanced Auto Features Will Be Banned in 2029

The Commerce Department is proposing that no Chinese or Russian software or hardware that enables cars to use GPS, connect to cell phones, or other external communication facilitators will be allowed to be imported, because the government believes that these are security risks.

Stakeholders still have 30 days to comment on the proposed rule, which, according to a call with reporters, will be finalized before President Biden leaves office.

The prohibition covers telematics control units, Bluetooth, cellular, satellite, and Wi-Fi modules, advanced battery management, as well as components that work to allow driverless operation of a vehicle. It applies to cars, motorcycles, trucks, including class 8 commercial trucks, RVs and buses, but not agriculture equipment or mining equipment.

The bans don't take effect immediately -- the one for software would begin in model year 2027, and the ban on hardware would begin in model year 2030, or Jan. 1, 2029, for vehicles that don't have model years.

The government is proposing that cars from manufacturers with majority ownership by Chinese nationals, such as Volvo and Polestar, wouldn't be allowed to be sold in the U.S., even if those cars were manufactured in the U.S., if they include these advanced features. It also proposes that a minority ownership could be enough to fall under the rule, if the governance of the company allowed that minority ownership to have veto power over certain decisions. Even a Chinese citizen who used to run a state-owned enterprise investing in, and serving on the board of a company could be enough to put a U.S company into this category.

"The Department of Commerce is also proposing procedures to let certain parties, such as small producers of vehicles, receive exemptions from the prohibitions on an exceptional basis, in order to minimize unanticipated and unnecessary disruption to industry," a White House fact sheet said. The notice of proposed rulemaking also says that the Bureau of Industry and Security may grant manufacturers a pass if the risks "have been, or can be, mitigated."