US car sales could drop by 25,000 a year under rules banning Chinese vehicles

By David Shepardson

WASHINGTON (Reuters) – The Commerce Department said on Friday that U.S. auto sales could fall by as much as 25,841 vehicles a year and prices would rise if proposed rules that would ban Chinese vehicles that connect to the internet and software go ahead and key hardware from China.

U.S. automakers and others selling in the United States “may be less competitive in the global market because of the relatively higher prices of their vehicles,” the department said. An estimated 1,680 to 25,841 fewer vehicles will be sold annually because of the rule.

Acting to reduce national security vulnerabilities that could be exploited by China, the department estimated the rule could bar $1.5 billion to $2.3 billion in vehicle entries from Chinese or Russian companies for the vehicles sold in the United States.

It previously said the proposal would amount to an effective ban on Chinese vehicles because they would all have internet-connected vehicle software and hardware, but proposed a process for companies to seek exemptions.

The Commerce Department is proposing that the software bans be effective in the 2027 model year, while the hardware ban would take effect in the 2030 model year, or January 2029. The public has 30 days to comment before the rules can be finalized.

The Commerce Department said the main benefit of the rules will be “a reduction in the chance of a catastrophic attack due to data exfiltration and remote manipulation of connected vehicles.”

This week, the department said General Motors and Ford Motor would have to stop importing vehicles into the U.S. from China under the rule.

GM sells the Buick Envision and Ford sells the Lincoln Nautilus — both assembled in China — in the US market. In the first half of 2024, GM sold about 22,000 Envisions and Ford sold 17,500 Nautilus in the US.

(Reporting by David Shepardson; Editing by Cynthia Osterman)