the united states bans chinese connected cars, and a "digital iron curtain" falls over the supply chain
2024-09-25
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under the banner of national security, the united states has decided to continue to expand its blockade of china's auto industry. this time, the u.s. department of commerce has proposed a ban on the "sale or import" of connected vehicles and certain components from "countries of concern."$7,500 subsidyinduce domestic car companies to stay away from chinese batteries, usingforcing domestic car owners to stay away from imported chinese cars.the us reasoning is that certain hardware and software in connected vehicles can capture information about geographic areas or critical infrastructure and provide malicious actors with opportunities to disrupt the infrastructure or the operation of the vehicle itself.(Gina Raimondo)in a hypothetical scenario, a hostile foreign power could instantly take control of tens of thousands of connected cars simultaneously, creating chaos on america's public roads.specifically, entering the u.s.“blacklist”is made by china, russia, or has sufficient connections with them (sufficient nexus) that designs, develops, manufactures or supplies vehicle connectivity systems (VCS) and autonomous driving systems (ADSvehicle connectivity systems refer to the systems and components that connect or support the vehicle to the outside world, including bluetooth, cellular, satellite, andWi-Fimodules, and various microcontrollers that support communication functions (microcontroller), modules andSoCetc. automated driving system refers to a system that allows a highly automated vehicle to be operated without a driver, corresponding toSAEunder the standardL3、L4andL5level autonomous driving.under the proposed rules, the software ban would2027model year (Model Year) will take effect, and the hardware ban will be2030the ban leaves only a narrow compliance mechanism for certain parties to be exempted under exceptional circumstances.30 days to solicit public comments and plans to launch the1moon20president biden is expected to finalize the rules before his term ends on sunday.this will further close the door for chinese cars to enter the us market after the tariffs, and also block the currenta detour through mexico. it is an important part of the "cold war" around strategic industries under the "digital iron curtain" created by the united states.last year, the u.s. department of commerce began preparing this rule.2in july, the rule was drafted and sent to the executive office of the president (OMB)'s office of information and regulatory affairs for review (OIRA Review). at that time, the us media leaked that the white house wanted to investigate whether chinese cars posed a national data security risk, and also mentioned cameras and sensors.then,3moon1on the 14th, the ministry of commerce“advance notice of proposed rulemaking”（ANPRM) was released.60within days, the ministry of commerce received57written feedback, mainly fromfordamerican automakers, andWaymothe chinese side did not directly submit comments.9moon23day, about“securing the connected vehicle information and communications technology and services supply chain”the proposed rule (NPRM) is published.“advance notice of proposed rulemaking”of21page, expanded to“proposed rules”of119the newly added space reveals details on how the various parties will implement this rule, and also provides a glimpse into the direction of possible further restrictions in the future.the definition of connected cars has been narrowed to a certain extent.“a vehicle that is connected via an in-vehicle network and software system and can interact with other networks or devices via wireless communications (such as short-range communications, cellular, satellite, etc.)”, changed to“a vehicle driven by mechanical power, designed for travel on public roads, integrated with on-board network and software systems, and capable of connecting to other networks or devices through wireless communication”this includes most vehicles such as passenger cars, motorcycles, buses, small and medium-sized trucks, but temporarily excludes“railway vehicles”or unmanned aerial vehicles. but the ministry of commerce did not make a final statement, saying it would not rule out further blocking in the future.no matter where you are,“owned by, controlled by, or under the jurisdiction or direction of a foreign adversary”entities are subject to restrictions. it includes (a) acting on behalf of a foreign adversary, such as as an agent, employee, or at the order, request, or direction of a foreign adversary;b) is a citizen or resident of a foreign adversary country and is not a u.s. citizen or permanent resident;c) any company, partnership or other organization that has its principal place of business or headquarters in a foreign adversary country or is registered in a foreign adversary country;d) any company or organization that directly or indirectly controls the company's important decisions through holding a majority stake, board representation, contractual arrangements, etc. by an entity that meets the first three items. it basically blocks the way for chinese companies to set up factories in mexico and then sell to the united states.the restricted supply chain has shrunk to“the system that most directly facilitates data transmission”the ministry of commerce has previously proposed six major systems, including vehicle operating systems (OS）、telematics system、advanced driver assistance system（ADAS）、automated driving system（ADS), telecommunication systems and battery management systems (BMS).here,Waymohelp said that a complete ban would hurt american companies, and suggested only targeting the most risky parts. so that's the currently proposed vehicle connection system and autonomous driving system, which involve the most direct data in and out of the vehicle.the proposed notice also spent a long time explaining how foreign adversaries could exploit the security vulnerabilities of the two systems. the notice also specifically warned that even if the only business of a foreign adversary entity is assembly or integration, installing one of the two systems into a complete vehicle will be restricted by the rules; modifications and customization based on open source software are also restricted by the rules.lidar is safe for now, but there are still differences of opinion about it. the reason why it is not restricted for now is that it lacks the ability to transmit information independently from the vehicle to the outside world; and restricting the autonomous driving system often restricts the connected car that integrates vision and radar. at the same time, those below450mhz wireless communication devices, such as tire pressure monitoring systems and electronic key fobs, are not restricted, but aftermarket telematics devices, such as fleet tracking equipment, are restricted.the in-vehicle system is also safe for the time being, mainly for the same reason as radar. most of the current in-vehicle systems do not have the function of independently transmitting data, and this function must be achieved through the vehicle connection system.a declaration of conformity is required for each model year. the declaration of conformity must include detailed supply chain documentation, including a hardware bill of materials (HBOM) and software bill of materials (SBOM), etc., listing the sources, suppliers, and specific technical information of hardware and software. if there are major changes, you also need to30these are designed to minimize the possibility that foreign adversary entities could exploit the complexity and opacity of the supply chain.containing china's auto industrydespite the national security claim, the us is clearly trying to prevent china from taking the lead in electrification and smart technology. from using industrial policies to exclude china's battery supply chain, to using tariffs to exclude chinese electric vehicles, to now ignoring regional“connected car”new regulations, the united states is launching new“cold war”。on monday, the u.s. national economic councilNational Economic CouncilbrainardLael Brainard) told the detroit economic club that he did not want to seethe “second china shock”。chinese electric vehicles are gaining a competitive edge in the global market. even american automakerstesla, and failed to develop3pure electric vehicles below 10,000 us dollars make chinese electric vehicles100%china still has a fighting chance under tariffs. this is not only true for complete vehicles, but also for china's lidar, car cameras and mature process chips, which are gaining a larger share of the global market.according to the forecast of the semiconductor industry association of the united states, by2032in 2010, china28nmprocess chip，10-28nmthe chip will also be upgraded to approximately20%they can be used in telematic control units for vehicle connectivity systems (TCUearlier this year, the u.s. department of commerce’s bureau of industry and security (BIS) has begun a comprehensive assessment of the extent to which mature process chips manufactured by chinese companies are used in key u.s. industries such as automobiles, telecommunications and medical equipment.the competitive advantage of china's automobile industry is still extending from electrification to intelligence.Garnterthe digitalization level of global automakers is ranked based on eight dimensions, including connected cars, autonomous driving, electrification, and smart cockpits.2024year, chinanio、xiaopeng、auspicious、bydthey rank high and generally make rapid progress, while american automakers are either making progress or falling behind.chinese auto brands have strong digital innovation capabilitieschinese automakers are accelerating their overseas expansion, especially in mexico and other countries in the united states“friendly shore”the investment in production capacity is aimed at circumventing the restrictions of us industrial policies and tariff barriers. one of the tools the us has found is to use this new regulation to fill the gap.“vulnerabilities”, in the process of blocking the globalization of china's automobile industry, to buy breathing time for local companies.the united states hopes that the country's automobile manufacturing will return to its home country, or at least decouple from china. currently, gm sellsbuick envision(BuickEnvision), sold by fordlincolnnautilus(Lincoln Nautilus), both models are assembled in china. reuters quoted the head of the ministry of commerce's information and communications technology office as saying that gm and ford are aware that“future”cars produced in china for the u.s. market“will need to stop production in china and move to other places”。the new rules will also affect chinese automakers' entry into the us market. under the current us industrial and tariff policies, not many chinese cars are entering the us market, and geely and byd are relatively affected. currently, there are four major auto brands sold in the us whose production lines are located in china. in addition to the two american brands mentioned above, there is also geely'svolvo s90and northpolestar 2in addition, byd owns byd north america, which produces electric buses.。gm did not say whether it would have to stop selling the envision, but said the government was playing an important role in safety issues. ford declined to comment. volvo cars said it was reviewing the commerce department's proposal. byd did not immediately comment.the new regulations will also affect u.s. self-driving companies, especiallyWaymoand its partner geely.Waymoin a written response submitted a few months ago, the company mentioned that its next-generation vehicle platform was purchased from geely and a vehicle purchase agreement was signed, but emphasized that the latter provided“autonomous driving ready base vehicle”, and the sensor is composed ofWaymodeveloped by ourselves, the integration of the autonomous driving system is done byWaymoresponsible.but in recent months,Waymoit has met with executives of hyundai motor at least three times, and the market even speculates that it will use hyundai'sIoniq 5replacing geely's zeekr as the sixth generation of self-driving cars“autonomous driving ready base vehicle”。chinese electric vehicle companies are all transforming to smart driving, especially after tesla took the lead in launching an end-to-end large model solution.L2arriveL4the attempts to adopt this route are heating up. huawei hopes to2030xiaopeng enterprises proposes that autonomous driving can be realized next yearL4whether it is vertical integration or empowering car companies, the road for advanced autonomous driving cars to enter the united states has been blocked in advance.the “digital iron curtain” under icts rulesalthough there is still room for lobbying on the new regulations and their specific implementation details, the introduction of the new regulations itself is a major development for the u.s. supply chain, especially the information and communications technology and service supply chain.“de-sinicization”this is a part of“digital iron curtain”, trying to separate china from the united states. the united states is also actively influencing its allies.an abbreviation that frequently appears in this proposed notice isICTS, namely information and communications technology and services. its prototype was born during the trump administration and officially came into effect during the biden administration. the results of the us election are unlikely to change the new rules.2019year5in june, trump officially signed the executive order "ensuring the security of the information and communications technology and services supply chain".11in january, the ministry of commerce issuedICTSthe rules are proposed and open for comment.2021year6in june, biden officially signed the executive order "protecting americans' sensitive data from attacks by foreign adversaries".11in january, the ministry of commerce revisedICTSthe rules were released for public comment.6moon,ICTSthe rules were officially released and took effect the following month.this year, we discovered that self-driving cars from china are already quietly driving on american roads.18010,000 miles later, fortune magazine interviewed the california department of motor vehicles (DMV), california public utilities commission(CPUC), national highway traffic safety administration(NHTSA), federal trade commission(FTC), national security agency(NSA)department of homeland security (DHS), as well as other levels of government and privacy protection organizations, found that no organization was clearly responsible for this.ICTSthe rules give the ministry of commerce complete power to intervene.this time“connected car”the new regulations are the us department of commerce'sICTSimportant practice of rules. in the future,“digital iron curtain”or continue to expand the scope of coverage.ICTSthe rules cover a wide range of areas, from network and telecommunications infrastructure services, cloud services, to information and communication technology hardware products and internet applications, to autonomous driving and the currently popular artificial intelligence, as well as more cutting-edge quantum computing. previously, the united states has banned chinese telecommunications companies from entering the us market. this year, the united states also launched an investigation into chinese-made cranes in domestic ports because they have iot capabilities.the united states is trying to win over its allies to stand with it“digital iron curtain”the same end.on monday, brainard, director of the national economic council, spoke about the u.s.-mexico-canada said during the trade agreement that it had begun negotiations with mexico and hoped that the mid-term review in 2026 would further close the loopholes.on tuesday, canadian finance minister chrystia freeland said canada was "absolutely" considering a similar ban.this year4in february, when attending a high-level eu-us summit in belgium, raymondo warned his peers that mature process chips are the next area china wants to conquer. infineon, nxp and stmicroelectronics are still three of the top five suppliers in the automotive chip market. recently, the european commission(European Commission)have been asking whether competitors from china are harming their interests.the us ban may have an impact on the eu's re-vote on imposing tariffs on chinese electric vehicles at the end of this year.,have10countries explicitly support tariffs.2countries are seen as supporting tariffs,4countries clearly opposed11countries abstained from voting. germany is seeking more votes against the bill recently, while a meeting between china's ministry of commerce and the eu trade commissioner failed to reach a new agreement.it is no coincidence that the us government chose to release the new regulations at this time. it may even hope to provoke china to take the same retaliatory measures, which will ultimately force multinational companies to withdraw from china and accelerate the process of decoupling.
