The Biden administration has finalized a new rule that would effectively ban all Chinese vehicles from the US market, citing concerns over spying and national security. The rule, which targets connected vehicle software from "countries of concern," could have far-reaching implications for automakers, including Ford, GM, and smaller manufacturers like Polestar.

The rule covers a wide range of vehicle components, including Bluetooth, Wi-Fi, cellular, and satellite systems, as well as cameras, sensors, and onboard computers. According to US Secretary of Commerce Gina Raimondo, these technologies could be exploited by foreign adversaries to collect sensitive data about US citizens and infrastructure. The rule would also ban China from testing its self-driving cars on US soil.

The new rule is the latest escalation in the ongoing trade restrictions put in place on Chinese-made vehicles, including components like computers and batteries. It comes at a time when China is churning out more cars than ever before, earning its status as the No. 1 auto exporter in the world. The rule also covers vehicles and components made by Russia.

China's access to vehicle software presents "a significant threat" to the US, according to the White House, as it would grant an adversary "unfettered access" to critical tech systems and the user data that they collect. The administration is committed to securing critical American supply chains and protecting national security.

The auto industry had sought to delay the rule by a year, but was unsuccessful. The Alliance for Automotive Innovation, which represents major automakers, expressed concerns that the global automotive supply chain is complex and that parts could not be simply swapped out without disruptions.

Other automakers were more explicit in their criticisms. Polestar, an electric vehicle manufacturer owned by Geely, said that the rule "would effectively prohibit Polestar from selling its cars in the United States, including the cars it manufactures in South Carolina." Waymo, which is planning to use vehicles manufactured by Geely's Zeekr for its next-gen robotaxi, said that it takes precautions to ensure that the vehicles it purchases for its fleet arrive without any manufacturer-installed telematics systems.

The rule could significantly disrupt the plans of companies like Waymo, which is planning to expand its operations. Spokespersons for Polestar and Waymo did not immediately respond to requests for comment.

The rules for prohibited software go into effect for model year 2027 vehicles, while the ban on hardware from China waits until model year 2030 vehicles. The updated rules exempt vehicles weighing over 10,000 pounds, which would allow companies like BYD to continue to assemble electric buses in California.

The implications of this rule are far-reaching, and could have a significant impact on the global automotive industry. As the US takes steps to protect its national security, it remains to be seen how this will affect the sales and production of Chinese-made vehicles in the US market.