U.S. to ban Chinese software in self-driving cars amid national security fears

Although the timing is yet unclear, the DOC is reportedly set to propose a rule in the coming weeks that would ban Chinese software from being used in advanced autonomous vehicles and so-called connected vehicles, Reuters reported, citing sources briefed on the matter. The impending rule would affect Level 3 autonomous vehicles and above, which includes vehicles that can self-drive but require a driver, all the way to robo-taxi vehicles that don’t require drivers.

If implemented, the new rule would rid Chinese autonomous-vehicle makers of the relatively lax regulations they have enjoyed in the U.S. so far. Automakers and suppliers would need to assure regulators that they are not using advanced autonomous software from China or another “foreign entity of concern” in their vehicles, according to Reuters.  

The impending rule would bar Chinese companies from testing autonomous vehicles in the U.S., which government officials have recently painted as an increasingly salient security issue.

Chinese companies have been quietly testing autonomous vehicles in the U.S. for years, and since 2017, these vehicles have driven more than 1.8 million miles in California alone, Fortune previously reported. The autonomous vehicles—equipped with cameras, microphones, and lidar sensors, which use a laser to map terrain in detail—have recently raised concerns among U.S. officials that China could potentially use the data for its military applications.

While at least seven partially or fully Chinese-based companies are approved to test autonomous vehicles in California, China does not allow U.S. self-driving car companies, such as Alphabet subsidiary Waymo and General Motors–owned Cruise, to operate in the country. U.S.-based Tesla had to pass a Chinese data security test to operate in the country and under law must store any Chinese data collected by its vehicles within the country’s borders.

Although regulation of these Chinese-made autonomous vehicles falls under the purview of several government agencies, there are few rules and restrictions in place regarding the companies’ operations and how and where they store their data. None are akin to those that exist in China.

The U.S. has recently raised alarms about Chinese vehicles, especially low-cost electric vehicles. In May, President Biden increased the tariff on imported Chinese EVs to 102.5%. Commerce Secretary Gina Raimondo also said in January she was concerned about detailed data from autonomous vehicles being sent abroad.

These vehicles are “collecting a huge amount of information about the driver, the location of the vehicle, the surroundings of the vehicle,” Raimondo said in January, Bloomberg reported. “Do we want all that data going to Beijing?” A spokesperson for the Commerce Department echoed Raimondo’s concerns in a statement to Fortune.

“The U.S. Department of Commerce is concerned about the national security risks associated with connected technologies in connected vehicles,” the spokesperson said.

The spokesperson added that the Bureau of Industry and Security (BIS), an agency within the Commerce Department, will “issue a notice of proposed rule-making, which will focus on specific systems of concern within the vehicle.” Industry players will have a chance to review the proposed rule and make comments, the spokesperson said. 

“BIS remains committed to safeguarding U.S. national security in an evolving threat environment, and will continue to work with industry to achieve our common goal,” the spokesperson said.