On the Dash:
- Automakers must certify the removal of Chinese software from connected vehicle systems by March 17.
- Multi-tier global software supply chains complicate compliance.
- The rule is accelerating onshoring efforts.
U.S. automakers and suppliers are racing to remove Chinese software from connected vehicle systems ahead of a March 17 federal compliance deadline, as new national security rules force the industry to reexamine deeply embedded global supply chains.
The regulations, issued by the Commerce Department’s Bureau of Industry and Security, prohibit Chinese software from being used in vehicle systems that connect to the cloud. The rule is aimed at preventing sensitive data collected by cameras, microphones, GPS systems, and advanced driver assistance technologies from being accessed or exploited by foreign adversaries. Automakers must certify that core vehicle software was not developed in China or by Chinese-owned companies. Vehicles produced by Chinese or China-controlled manufacturers are also banned from U.S. roads, regardless of where their software originates.
The requirements extend to autonomous driving systems and will expand to connectivity hardware beginning in 2029, significantly widening the scope of compliance. The deadline has added urgency to efforts already underway to reduce dependence on Chinese components, an effort accelerated by pandemic-era disruptions and rising geopolitical tensions.
For automakers, identifying the origin of embedded code has proven difficult. Vehicle software is often layered through multiple suppliers, subcontractors, and joint ventures, many of which operate in China. Suppliers are often reluctant to disclose source code details due to intellectual property concerns, complicating compliance efforts. Even when Chinese software is identified, replacing it can introduce operational risk, as automotive code is typically custom-built and tightly integrated into vehicle systems.
Federal regulators have allowed limited flexibility. Chinese software transferred to a non-Chinese entity before March 17 may still be used, prompting a wave of corporate restructuring. Global suppliers are relocating development teams, while some Chinese firms are seeking new ownership arrangements for Western operations. Companies with connected products and Chinese ownership ties, including tire and component manufacturers, are actively pursuing restructuring options to remain compliant.
