Canadian auto industry pushes government to ban Chinese software, hardware

Canada’s auto industry is calling on the federal government to follow the lead of its U.S. counterparts in a push to ban Chinese software and hardware used in connected vehicles on American roads.

Citing national security concerns, the U.S. Commerce Department on Sept. 23 proposed prohibiting the key components in a move that, if passed, would effectively bar Chinese cars and trucks from the U.S. market.

U.S. President Joe Biden's administration has raised concerns about connected Chinese vehicles collecting data on U.S. drivers and infrastructure and potential foreign manipulation of vehicles connected to the internet and navigation systems. In February, the White House ordered an investigation.

The proposed prohibitions would prevent testing of self-driving cars on U.S. roads by Chinese automakers and extend to vehicle software and hardware produced by Russia and could be extended to other U.S. adversaries.

Canada has similar concerns and is “absolutely” considering a similar ban, Finance Minister and Deputy Prime Minister Chrystia Freeland told reporters this week.

'Security threat'

“Our government takes very seriously intentional Chinese overcapacity, and we take very seriously the security threat from China,” Freeland said. “We do have real security concerns.”

Canada’s own 100 percent tariff on EVs made in China will take effect Oct. 1, though only Tesla and Polestar currently import vehicles from there.

“That is something we talked about in imposing the tariffs on EVs and something that came out very, very clearly in the consultation,” Freeland said of the cybersecurity issues Chinese software and hardware present.  

She said there is ongoing consultation with the industry.

“We are looking at whether we need to impose further measures,” she said.

The Canadian Vehicles Manufacturers’ Association, which represents the interests of the Detroit 3 automakers in Canada, said Sept. 24 that it supports the U.S. ban and wants Canada to do the same.

Risks also impact Canada

The U.S. has identified national security risks stemming from China and Russia related to specific connected vehicle technologies — risks that also affect Canada,” the association's CEO Brian Kingston said in a statement. “We urge the federal government to evaluate these concerns and harmonize any policy solutions with the U.S. given the integrated nature of the automotive industry between our two countries.”

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, on Sept. 23 told the Standing Committee on International Trade that “we should harmonize with the United States.”

“There should be no daylight between us,” he said.

Volpe called China a “cheater” in the global automotive game.

“China … knows the rules and is going to break them,” Volpe said. “And when you catch up and want to moralize and say [to them] ‘you did it wrong,' you’ve lost."

Nearly all newer cars and trucks are considered "connected" with onboard cameras, microphones, Bluetooth connectivity and network hardware for Internet access, allowing sharing of data with devices inside and outside the vehicle.

“The Chinese know they can be used for spying,” Volpe told Automotive News Canada.

There are relatively few Chinese-made cars or light-duty trucks imported into the United States. Commerce Secretary Gina Raimondo said the department is acting "before suppliers, automakers and car components linked to China or Russia become commonplace and widespread ... We're not going to wait until our roads are filled with cars and the risk is extremely significant."

Safety concerns

"When foreign adversaries build software to make a vehicle that means it can be used for surveillance, can be remotely controlled, which threatens the privacy and safety of Americans on the road," Raimondo said. "In an extreme situation, a foreign adversary could shut down or take control of all their vehicles operating in the United States all at the same time causing crashes, blocking roads.”

Ontario Premier Doug Ford called on Canada to act.

"Canada must stay in lock-step with our American allies and do the same," he said in a post on X.

The U.S. proposal would make software prohibitions effective in the 2027 model year. The hardware ban would take effect in the 2030 model year or January 2029.

The Alliance For Automotive Innovation, a group representing major automakers including GM, Toyota, Volkswagen and Hyundai in the U.S., said some automakers may need more time to comply.

The group said there is "very little" connected vehicle hardware or software "that enters the U.S. from China. But this rule will require auto manufacturers in some cases to find alternate suppliers."

Volpe said the delay in the ban “is an admission that we don’t have the domestic sources or friendly sources at volume, reliably for the stuff you’re going to ban.”

 Reuters contributed to this report.