Journal of Supply Chain

The U.S. is poised to escalate its technological rivalry with China by targeting the rapidly growing sector of autonomous and internet-connected vehicles. The Biden administration is set to propose new restrictions on the sale of Chinese vehicle software in the U.S., a move driven by concerns over data security risks associated with smart cars. According to sources familiar with the matter, these restrictions could be introduced as soon as this month. The proposed limits would not only affect the use and testing of Chinese technology in autonomous vehicles but also address the broader cybersecurity risks posed by vehicles equipped with internet-connected devices. These devices, increasingly common in both gas and electric vehicles, make cars potential targets for hacking. The planned measures stem from an investigation launched by President Joe Biden in March, focusing on the cybersecurity threats posed by Chinese vehicle software. China has rapidly become a global leader in the electric vehicle (EV) market, thanks to substantial government subsidies and support. Companies like BYD Co. have even surpassed Tesla Inc. in electric vehicle sales in recent quarters. As a result, global automakers have grown increasingly reliant on Chinese suppliers for technology critical to connected vehicles. Despite their success, Chinese automakers like BYD have had limited market presence in the U.S., partly due to a 27.5% tariff imposed by former President Donald Trump, which President Biden announced in May would increase to over 100%. The new restrictions on internet-connected vehicle technology are intended to prevent Chinese-made cars from gaining a significant foothold in the U.S. market. The move would also protect American drivers from potential data collection by Chinese companies, which could be transmitted back to China. The proposed restrictions, which would be enforced by the Commerce Department, may include a phase-in period to give automakers