Biden Admin’s China Auto Tech Cleanup Could Hurt Detroit

On September 23, the Biden Administration’s Commerce Department proposed sweeping rules that would effectively ban Chinese-origin technology in “connected cars” destined for US roads.

The move, which was echoed by Biden’s national security adviser, Jake Sullivan, and US Commerce Secretary Gina Raimondo, is justified on national security concerns, as it intends the rule to prevent Chinese intelligence agencies and actors bad to spy on Americans or use connections. cars as a way to access critical infrastructure.

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“We will secure our cars and protect the American people, including our children, from potential remote surveillance, access and control, protecting Americans from bad actors and trying to give all Americans peace of mind,” Raimondo said in a press briefing .

While the moves were intended to protect the country from foreign adversaries, a new report shows they could have consequences for automakers closer to home.

Workers on the assembly line of the Buick Envision SUV at the GM China Dong Yue Motors assembly plant

VCG/Getty Images

New rules

According to a Reuters report, a Commerce Department official noted that the proposed regulations would effectively ban sales in the United States of all vehicles made in the People’s Republic.

Elizabeth Cannon, executive director of the Commerce Department’s Office of Information and Communications Technology and Services, noted that the rules also apply to some of Detroit’s best, including General Motors. (GM) and Ford (F) which would discourage any effort to import Chinese-made vehicles.

“We anticipate at this point that any vehicle that is manufactured in China and sold in the U.S. will come under the bans,” Cannon told Reuters.

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The China connection

Passenger cars made in Chinese factories are sold in the United States and are currently on the streets; however, they don’t have any Geely (GELYPH) BYD (BYDDY) or NIO (NO) badges affixed to goods, bumpers, body panels or grilles.

Instead, they bear Western names. Ford produces the Lincoln Nautilus crossover SUV for its luxury brand through a joint venture with Chinese state-owned automaker Changan. Similarly, GM produces the Buick Envision crossover SUV for the luxury brand through a joint venture with Chinese state-owned automaker SAIC.

These crossovers are huge draws for their brands. General Motors sales data shows that more than 21,860 Buick Envisions were sold in the US in the first half of 2024, marking about 24% of the brand’s sales.

Similarly, Ford sales data shows that Lincoln moved 17,504 Nautilus vehicles in the US in the first half of the year; about 36 percent of its sales—part of which can be attributed to the Nautilus earning an IIHS Top Safety Pick+ award and a spot on WardAuto’s 2024 list of 10 Best Interior and UX winners.

The interior of the 2024 Lincoln Nautilus features “Digital Experience,” a new “connected” infotainment system, a 48-inch widescreen powered by Google.

Ford/Lincoln

In particular, Nautilus; which is made in a factory in Hangzhou, Zhejiang, China, has been praised by the auto industry authority for its large, 48-inch 4K screen.

Dubbed by Ford “The Digital Experience,” the software for the dashboard-wide screen is developed by Google and is intended to be in the driver’s line of sight.

In a statement, WardAuto judge Drew Winter noted that the Lincoln “literally sits on the cutting edge of vehicle cockpit design,” adding that “its impressive pillar-to-pillar display is pushed far forward on the instrument panel, so so that all the necessary information can be seen without taking your eyes off the road.”

Related: Lincoln’s latest luxury cruiser is a Google-powered smartphone on wheels

The proposed rules target the hardware and software that underpin modern “connected cars,” including software that allows cars on the road to connect to Wi-Fi, satellite and cellular networks and autonomous car software.

While it may help automakers doing business in the United States avoid the threat of cheap Chinese imports that could pose a serious national security risk, other advocates say such actions are unnecessary.

In a statement, the Alliance For Automotive Innovation, a DC-based trade and lobbying group that represents major automakers such as GM, Ford, Toyota, Porsche and Hyundai, said there is “very little” hardware or software technology that coming to the usa of China, but argued that automakers will need more time to comply if the ruling is passed.

“I’ve said this in other contexts, but it applies here: You can’t just flip a switch and change the world’s most complex supply chain overnight. It takes time,” said Alliance For Automotive Innovation President and CEO John Bozzella. “The lead time included in the proposed rule will allow some automakers to make the necessary transition, but may be too short for others.”

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