Concerns in countries around the world over China-made connected cars are mounting. The worry is that China could collect local data in each country through connected cars. The United States decided to ban the use of China-made software in connected cars starting next month, and a prominent Canadian politician criticized the increased imports of China-made electric vehicles as "spy cars." In Korea as well, China-made electric vehicles are increasing, but related regulation is difficult because it could trigger trade friction.
According to the Wall Street Journal (WSJ) on the 13th, the Bureau of Industry and Security (BIS) under the U.S. Department of Commerce will impose a blanket ban on the use of software in China-made connected vehicles starting Mar. 17. Automakers must prove that core connected-car software in their vehicles—such as infotainment systems, cameras, and advanced driver-assistance systems (ADAS)—was not created in China and contains no code developed by China-affiliated corporations. However, among Chinese software, if it was transferred to a non-Chinese company before Mar. 17, its use is allowed. The BIS plans to extend the ban to China-made connected-car hardware starting in 2029.
The measure is intended to block information from flowing to China through automobiles. A connected car is a car connected to the internet. It has become part of a vast network, exchanging data in real time with smartphones, road infrastructure, other vehicles, and surrounding objects. It is not a simple means of transportation but a moving "data collection device." In particular, as electric vehicles designed with software-centered architecture from the neural network of the car on up spread, connected cars have moved deep into everyday life.
Concerns that connected cars will become a means for China to collect information are being raised in other countries as well. Canada had imposed a 100% punitive tariff on China-made electric vehicles since 2024, but last month it sharply eased the measure to levy only a 6.1% tariff on 49,000 China-made electric vehicles annually. In response, Ontario Premier Doug Ford publicly criticized it as "bringing in spy cars."
Canadian economist George Takach said, "China banned Teslas from entering secure facilities over concerns about U.S. government data access," adding, "Canada needs to have similar concerns." He also argued, "If relations with China deteriorate, the Chinese government could instruct electric vehicle companies to interfere with the transmission of electric vehicle software upgrades in Canada."
According to Bloomberg News, the Polish Ministry of National Defense is considering a plan to ban China-made electric vehicles from entering military facilities. According to the Polish Automotive Industry Association, the market share of Chinese auto brands in Poland rose roughly fourfold in one year, from 2% in 2024 to 8.2% last year.
Amid these moves, automakers and parts suppliers in the United States are scrambling to erase the Chinese imprint. Italian tire corporations Pirelli are a prime example. Pirelli's largest shareholder is Sinochem (China National Chemical Corporation), a Chinese state-owned oil and chemical corporation that holds 34.1% equity. Pirelli's smart tires have cloud connection features, and at this rate they could be pushed out of the U.S. connected-car market.
In response, Pirelli has proposed selling equity to Sinochem while also reviewing a plan to manage its U.S. smart tire business separately. The WSJ said, "Global suppliers are transferring software teams based in China elsewhere, and Chinese corporations are seeking new owners for their Western business units."
However, there is also talk that the U.S. BIS could grant a grace period for the regulations. Connected-car software is often built for each model and is difficult to change midstream. The WSJ said, "There is a possibility of temporary exemptions if companies prove they have addressed the risks in other ways."
In Korea as well, China-made electric vehicles are rapidly increasing, but it is difficult to single out and regulate China-made software as the United States has. An official at the Ministry of Land, Infrastructure and Transport (MOLIT) said, "Regulations targeting a specific country risk trade friction, so Korea tends to follow international standards, but there are no international standards yet that restrict software from a specific country."
BYD, China's leading electric vehicle maker, sold a total of 6,107 units in Korea last year, ranking 10th among all brands. It is stepping up its push into the domestic market, including the recent launch of the small electric hatchback "Dolphin" in the 20 million won range. Another Chinese electric vehicle brand, Zeekr, also plans to launch its first new model in Korea this year.