Biden Administration Finalizes Rule Banning Chinese Connected Cars and Robotaxi Testing

Biden Administration Finalizes Rule Banning Chinese Connected Cars and Robotaxi Testing

The U.S. Department of Commerce unveiled a significant regulation on Tuesday, aimed at national security protection by halting the import and sale of connected vehicles originating from China and Russia. This new rule also prohibits the testing of self-driving cars by Chinese manufacturers, including corporations like WeRide and Pony AI, on American roads.

National Security Concerns

“China is trying to dominate the future of the auto industry, but connected vehicles with software and hardware systems linked to foreign adversaries could expose the American people to risks of misuse of their sensitive data or interference by malicious actors,” National Economic Advisor Lael Brainard stated, emphasizing the importance of "a more secure American auto industry."

Implementation Timeline

The enforcement of software bans is slated for the 2027 model year, while hardware prohibitions will commence in 2029. The Department of Commerce clarified that these restrictions do not apply to Chinese software developed before the implementation of the new rules, provided that Chinese firms do not access the software.

Exemptions and Implications

The rule specifies exemptions for vehicles exceeding 10,000 pounds, thereby allowing China's BYD to continue assembling electric buses in California. This is a critical exception within the framework meant to limit Chinese influence in the U.S. automotive sector.

Impact on Chinese Autonomous Vehicle Companies

Numerous Chinese autonomous vehicle firms hold permits to conduct tests in California, with companies such as Baidu's Apollo Autonomous Driving and WeRide operating without safety drivers under these permits. Additionally, Pony AI has begun trading publicly and possesses a permit for testing with a safety driver. Pony AI's IPO filings highlighted a small risk of discontinuing its limited testing of robotaxis in the U.S. due to the impending ban, underscoring that these operations contributed "less than 1% of [its] total revenues in 2023 and the first half of 2024."

California DMV's Position

A representative from the California Department of Motor Vehicles previously indicated that the agency would align with the Commerce Department's directives regarding restrictions on Chinese connected vehicle technology. Efforts are underway to ascertain if the DMV will retract these testing permits following the announcement of the final rule.

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