US connected vehicle rule targets Chinese software
Automakers with global supply chains are facing a significant compliance challenge as Washington moves to restrict Chinese technology in connected vehicles. With cloud-linked systems now standard in modern cars, the industry is under pressure to trace the origin of embedded software before a key US deadline in March.
For eeNews Europe readers, the implications go beyond US policy. The rule is likely to reshape automotive software supply chains, affect semiconductor sourcing strategies, and influence compliance frameworks for European OEMs exporting to the US market.
Compliance deadline forces supply chain review
Under the connected vehicle rule introduced by the US Commerce Department’s Bureau of Industry and Security, carmakers must attest that, from March 17, core vehicle systems connecting to the cloud do not contain software written in China or by Chinese companies. The measure also covers advanced autonomous driving software and will extend to connectivity hardware from 2029.Hilary Cain, head of policy at the Alliance for Automotive Innovation, described the measure as “one of the most consequential and complex auto regulations in decades. It requires a deep examination of supply chains and aggressive compliance timelines.”
The regulation targets risks associated with cameras, microphones and GPS-enabled systems that could, in theory, transmit sensitive data. Carmakers sourcing electronics from tier-one suppliers may struggle to trace embedded code that originates in joint ventures or subcontractors in China.
“The suppliers don’t want to share source code,” said Brandon Barry, founder of Block Harbor Cybersecurity. “That’s their IP.”
Onshoring opportunity for cellular modules
The shift is also creating openings for US-based suppliers. Ohio startup Eagle Wireless is positioning itself as an alternative source of cellular modules, a segment where Chinese manufacturers reportedly held 87% global market share in the first half of last year, up from 69% in 2019, according to Counterpoint Research.Eagle acquired source code from China’s Quectel and is working with OEMs to migrate software ahead of the compliance deadline, while building domestic manufacturing capacity.
“The connected vehicle rule is a major tailwind for onshoring both software development and manufacturing,” said Mark Kvamme, Eagle’s co-founder.
The transition may come at a cost. Eagle’s modules are about 10% more expensive than Chinese-made equivalents.
European suppliers are also affected. Italian tire maker Pirelli, whose smart tires connect to the cloud, is assessing options because its largest shareholder is China’s Sinochem. Potential measures include reducing Sinochem’s 34% stake or ringfencing US operations.
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