Modern vehicles are stuffed with internet-connected widgets, plenty of them running Chinese technology, and the industry is now scrambling to dig it out before a looming deadline in a messy test of America’s decoupling ambitions.
New US rules will soon ban Chinese software in vehicle systems that connect to the cloud, part of an effort to prevent foreign adversaries from exploiting cameras, microphones, and GPS tracking.
Alliance for Automotive Innovation, head of policy Hilary Cain called it “one of the most consequential and complex auto regulations in decades. It requires a deep examination of supply chains and aggressive compliance timelines.”
Carmakers will need to attest to the US government that, as of 17 March, core elements of their products do not contain code written in China or by a Chinese company.
The rule covers software for advanced autonomous driving and will be extended to connectivity hardware starting in 2029, so this is not a one-off compliance box-tick.
Connected cars made by Chinese or China-controlled companies are banned, regardless of where their software comes from.
The deadline has injected fresh urgency into an industrywide effort to rely less on Chinese components, a shift that began with pandemic-era supply chain disruptions and has only accelerated as geopolitical tensions worsen.
Volvo Cars’ chief executive officer, Håkan Samuelsson, said: “There should be no critical semiconductor components coming from China—that’s easy to check. More challenging is to be sure that no data that the car collects can ever be transmitted to China.”
Automakers rarely control the entire stack and typically purchase electronics from large suppliers, who source software from smaller firms or joint ventures in China.
Even when Chinese software is easy to spot, replacing it is not like changing a ringtone, because automotive code is often bespoke and modifying existing vehicles introduces new risks.
Cybersecurity experts expect some automakers and suppliers to receive temporary exemptions from the software ban if they can demonstrate they have addressed the risks in other ways.
The Commerce Department’s Bureau of Industry and Security is also allowing Chinese code to be transferred to a non-Chinese entity before 17 March, which has predictably triggered a surge in legal paperwork.
One outfit caught in the crossfire is Pirelli, whose largest shareholder is the Chinese chemicals giant Sinochem, and the new rules bite because Pirelli’s smart tyres connect to the cloud.
Pirelli, its top two shareholders, and the Italian government are now discussing fixes, including Sinochem reducing its 34 per cent stake and ringfencing the US smart-tyre business.
Counterpoint Research data show that Chinese cellular module manufacturers held a global market share of 87 per cent in the first half of last year, up from 69 per cent in 2019.
The grip has drawn comparisons with America’s reliance on Chinese rare earths and the long-running security panic around telecoms vendor Huawei.
That push is now wobblier after the Trump administration fired two officials focused on tackling technological threats from China.
