United States Proposes Regulation of PRC Connected Vehicles

On 29 February 2024, President Biden directed the US Department of Commerce to address potential national security issues associated with connected vehicles produced by PRC companies.

Pursuant to its authority under Executive Order 13873, which was issued by President Trump on 15 May 2019, the US Department of Commerce issued an Advanced Notice of Proposed Rulemaking in connection with Security the Information and Communications Technology and Services Supply China (the “ANPRM”).

The ANPRM is not a legally binding regulation or even proposed regulation. It provides a general framework with questions to the public about initial views on definitions, scope, the legal framework, and a potential licensing process. The public comment period is 60 days. After the ANPRM public comment period, the US Department of Commerce will issue proposed regulations, which will involve another comment period, after which final, legally binding regulations will be issued. 

The definitions proposed under the ANPRM would broadly define a connected vehicle as vehicle with software or hardware features that can collect data, identify persons, learn and adapt to the driver, or interact with external communications. In effect, a connected vehicle would include any modern vehicle, meaning any prohibitions or restrictions would involve the entire vehicle entering the US. In terms of targeted entities, the ANPRM specifically targeted the PRC and the theoretical risk that PRC car companies can be compelled to hand over data to the PRC government for nefarious purposes. Like other US actual or proposed regulation against PRC business interests, the mere possibility of this is enough to prohibit, restrict, or otherwise regulate PRC business activity in the US that would not apply to other non-US companies. Finally, the ANPRM left open the possibility of a licensing regime that would allow PRC car companies to apply for licenses in respect of activities that are otherwise prohibited.

For more information on how we can help you navigate US-China tensions, please contact Charles Wu at Charles.Wu@clydeco.com