Automakers are racing to strip Chinese software and electronics out of vehicles sold in the United States, scrambling to comply with sweeping new national security rules that reach deep into the modern car’s digital guts. What started as a targeted effort to keep a handful of foreign suppliers out of critical systems has quickly become a full scale reengineering of connected cars, from dashboard infotainment to cloud linked tires. I see an industry that spent a decade optimizing around Chinese tech now trying to unwind that dependence on a deadline.
The stakes are high on both sides of the Pacific. Washington is treating connected vehicles as rolling data centers that could be exploited by foreign adversaries, while carmakers warn that ripping and replacing code at this speed risks delays, higher costs, and fewer features for drivers. The scramble to comply is already reshaping supply chains, investment plans, and even which foreign brands can realistically compete in the U.S. market.
The new security dragnet around connected cars
The pivot point is a set of national security rules that treat connected vehicles as part of critical infrastructure rather than just consumer products. The U.S. Department of Commerce, through its Bureau of Industry and Security, has finalized a rule to secure connected vehicle supply chains from what it calls foreign adversary threats, explicitly targeting technology linked to China and Russia in systems that can send or receive data over networks. That framework gives officials broad authority to review and block transactions involving software, electronics, and cloud services that touch a vehicle’s communications backbone, as described in the agency’s own press release.
Legal analyses of The Final Rule make clear how far this reaches inside the car. The measure prohibits certain transactions involving hardware and software integrated into the Vehicle Connectivity System, a definition that sweeps in telematics control units, cellular modules, over the air update platforms, and other components that move data between the vehicle and external networks. One detailed breakdown of The Final Rule stresses that any such system designed, developed, manufactured, or supplied by entities tied to China or Russia can be restricted, while a companion advisory explains how the Vehicle Connectivity System concept is meant to capture the full stack of communications functions inside modern cars, from embedded modems to cloud gateways, as outlined in a second analysis.
From policy to prohibition: how Washington tightened the screws
The current crackdown did not appear overnight, it builds on earlier moves that steadily narrowed the space for Chinese and Russian Connected Vehicle Technology. In its final months, the Outgoing Biden Administration adopted rules that prohibited the sale and import of connected vehicle hardware and software systems, as well as related services, when they involved Chinese and Russian suppliers in ways deemed risky to the American transportation system. Officials framed those restrictions as necessary to ensure that the American transportation system is not dependent on companies involved in connected car technology that could be leveraged by foreign governments, according to a detailed account of the Outgoing Biden Administration rules.
Those measures have since been hardened and clarified. A federal ruling summarized by industry specialists describes how regulators finalized a ban on the sale of connected vehicle technology from China and Russia, spelling out that importation and domestic sales of certain hardware and software are now off limits if they are designed, developed, manufactured, or supplied by targeted entities, as captured in one summary. Another explanation of the Department of Commerce process notes that the agency’s Bureau of Industry and Security is now responsible for reviewing transactions and issuing licenses or prohibitions, with a focus on Chinese and Russian technology in connected vehicles, as described in a report on the Department of Commerce rule.
What exactly is being banned inside the car
For automakers, the most disruptive element is that the rules do not just target whole vehicles, they reach into specific chips, modules, and lines of code. A detailed advisory on the U.S. Commerce Department’s connected vehicle prohibitions explains that the rule blocks the importation and sale of certain connected vehicle hardware or software that has been designed, developed, manufactured, or supplied by entities in China or Russia, and that it applies to components integrated into the Vehicle Connectivity System rather than only to finished cars, as laid out in one advisory. That means telematics units, connectivity modules, and even some sensor gateways are now under scrutiny if they rely on Chinese or Russian suppliers.
Separate legal commentary on New US Commerce Prohibitions on Chinese and Russian Connected Vehicle Technology underscores that the restrictions are designed to protect the connected vehicle ecosystem from espionage, sabotage, and data harvesting risks associated with Chinese and Russian vendors. The analysis notes that the New US Commerce Prohibitions cover both hardware and software, including updates and cloud services, and that companies must now map their supply chains to identify any Chinese and Russian Connected Vehicle Technology that could trigger a review, as explained in one legal brief. A second discussion of those New US Commerce Prohibitions emphasizes that the New security rules are meant to create a predictable process for industry while still allowing the government to intervene quickly when it sees a national security risk, as described in another analysis.
Industry scramble: ripping out Chinese code on a deadline
Once the rules moved from theory to enforcement timelines, the auto industry’s tone shifted from lobbying to triage. Reporting on the car industry’s response describes how New U.S. regulations will ban Chinese software in internet connected vehicle systems starting in mid March, with hardware restrictions following on a longer schedule, forcing companies to audit and replace code that touches the cloud. One detailed account notes that New U.S. rules ban Chinese software in vehicle systems that connect to the cloud, part of a broader effort to decouple from Chinese supply chains, as explained in an analysis by Stephen Wilmot. A companion quick summary of those same regulations underscores that the New rules will hit Chinese software first, then extend to hardware, giving automakers only a short window to qualify alternative suppliers, as highlighted in a related summary.
That has triggered a frantic search for non Chinese alternatives. One report on U.S. automakers describes how companies are racing to replace Chinese code used to run their vehicles, with engineers combing through telematics stacks, over the air update systems, and even smartphone companion apps to identify any Chinese components that could fall foul of the rules, as detailed in a piece on how U.S. automakers race to replace Chinese tech. Another account of the same trend notes that U.S. carmakers are racing to replace Chinese code used to run their vehicles, underscoring how deeply Chinese suppliers had penetrated everything from infotainment to battery management before the clampdown, as described in a follow up on how U.S. automakers race to replace Chinese components.
Chinese dominance in modules collides with U.S. dependence
The difficulty of this pivot is magnified by how dominant Chinese suppliers have become in key connectivity hardware. One detailed breakdown of the new regulations notes that they apply even to companies like Pirelli, whose smart tires connect to the cloud, because their systems rely on embedded cellular modules that fall under the connected vehicle definition, as explained in a report on how the rules affect Pirelli. The same reporting highlights that Chinese cellular module manufacturers had a global market share of 87%, up from 69% in 2019, a leap that leaves automakers with few drop in replacements that can match price and scale, as documented in an analysis noting that Chinese suppliers control 87% of that market, up from 69%.
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*This article was researched with the help of AI, with human editors creating the final content.
