$XPENG-W(09868.HK)$LI AUTO-W(02015.HK)$NIO-SW(09866.HK)

There weren't many exports to the other side to begin with, but the bigger fear is that other markets might follow suit.

The Biden administration is concerned about Chinese companies collecting data, posing national security risks.

The proposed ban includes critical communication and autonomous driving system software or hardware.

There is a 30-day public comment period before the rules are finalized.

Reuters Washington, September 21 - Two sources told Reuters that, citing national security concerns, the U.S. Department of Commerce is expected to propose a ban on the use of Chinese software and hardware in connected and autonomous vehicles on U.S. roads as early as Monday.

The Biden administration has expressed serious concerns about Chinese companies collecting data on American drivers and infrastructure, as well as the potential for foreign manipulation of vehicles connected to the internet and navigation systems.

The two sources said the proposed regulations would prohibit the import and sale of vehicles equipped with critical communication or autonomous driving system software or hardware from China. Since the decision has not been publicly disclosed, the sources requested anonymity.

This move marks a significant escalation in U.S. restrictions on Chinese automobiles, software, and components. Last week, the Biden administration finalized a substantial increase in tariffs on Chinese imports, including a 100% tariff on electric vehicles and new tariffs on EV batteries and critical minerals.

In February, President Biden ordered an investigation into whether imported Chinese vehicles pose national security risks to connected vehicle technology and whether the use of such software and hardware should be banned in all vehicles on U.S. roads.

In November last year, bipartisan U.S. lawmakers raised concerns about Chinese companies collecting and processing sensitive data during autonomous vehicle testing in the U.S.

The sources said the bans would be expanded to include other foreign adversaries of the U.S., such as Russia.

An industry group representing major automakers like General Motors (GM.N), Toyota (7203.T), Volkswagen (VOWG_p.DE), and Hyundai (005380.KS) warned that changing hardware and software would take time.

These automakers noted that their systems "undergo extensive pre-production engineering, testing, and validation processes and generally cannot be easily swapped with systems or components from other suppliers."

The Department of Commerce declined to comment on Saturday.