Biden Administration's Rule on Chinese Connected Cars and Robotaxi Testing

The U.S. Department of Commerce has announced a significant new rule that prohibits the sale and import of connected cars from China and Russia. This decision is driven by national security concerns aimed at preventing potential risks associated with foreign adversaries. The new regulation will also prevent car manufacturers from China, such as WeRide and Pony AI, from testing their self-driving vehicles on American roads.

Lael Brainard, the National Economic Advisor, emphasized the importance of this ruling, stating that China's ambitions in the auto industry could pose risks to sensitive data and overall safety. He noted, "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." This ruling aims to build a more secure American auto industry.

The timeline for this rule includes software bans that are set to take effect in the model year 2027, while hardware prohibitions will begin in 2029. It's important to mention that any Chinese software developed prior to the implementation of these new rules will not be affected, provided that there is no access granted to a Chinese company.

Additionally, the final rule outlines specific exemptions. For instance, vehicles exceeding 10,000 pounds will not fall under these restrictions, allowing companies like China’s BYD to continue producing electric buses in California.

Several Chinese autonomous vehicle companies currently hold permits to conduct testing in California. These include Baidu's Apollo Autonomous Driving and WeRide, both of which are permitted to test without safety drivers. Pony AI, which has recently gone public, holds a permit for testing with a safety driver. In their IPO discussions, Pony AI acknowledged a minor risk that their limited robotaxi testing operations in the U.S. may be impacted due to this new ban, though they clarified that these operations accounted for less than 1% of their total revenue for the year 2023 and the first half of 2024.

The California Department of Motor Vehicles has expressed its commitment to enforce these prohibitions on Chinese connected vehicle technology in alignment with the Department of Commerce’s directives. Questions remain as to whether the DMV will revoke existing permits in light of the newly issued regulations.

Biden, cars, China