The U.S. may place a ban on Chinese software in self-driving and connected vehicles, with the Biden administration expected to propose such rules in the coming weeks.
According to a report from Reuters citing sources briefed on the matter, the U.S. Commerce Department is looking to propose banning Chinese software in autonomous and connected vehicles this month. The rule would ban any Chinese software in U.S. vehicles with Level 3 or higher autonomous capabilities, effectively banning self-driving tests for companies from China.
Level 3 autonomous driving would allow drivers to take their focus off the road and even perform other activities unless otherwise prompted to take over driving by the vehicle. The sources also say the rule would require automakers and suppliers to confirm to regulators that their connected vehicle and Level 3 software platforms weren’t developed in a “foreign entity of concern,” such as China.
On Sunday, a spokesperson from the Commerce Department said the agency was “concerned about the national security risks associated with connected technologies in connected vehicles.”
Chinese self-driving developer reportedly files for IPO in the US
The rule is expected to come from the department’s Bureau of Industry and Security, and the department says that the requirement “will focus on specific systems of concern within the vehicle,” adding that “industry will also have a chance to review that proposed rule and submit comments.”
The Commerce Department initially said last month that it was considering imposing certain limits on some Chinese software, as well as those from other countries considered adversaries.
“Only division of labor and cooperation can bring mutual benefits, and only fair competition can bring technological progress,” said a spokesperson from the Chinese embassy in Washington D.C. in response to the expected proposal “China urges the U.S. to earnestly abide by market principles and international trade rules, and create a level playing field for companies from all countries. China will firmly defend its lawful rights and interests.”
Last Wednesday, the White House and State Department held a meeting with officials from around the world to “jointly address the national security risks associated with connected vehicles,” according to the department. The meeting also included details about the administration’s plans to propose the rule.
The conference included officials from the U.S., Canada, Australia, the European Union (EU), the United Kingdom (UK), Germany, Spain, India, South Korea, and Japan, who “exchanged views on the data and cybersecurity risks associated with connected vehicles and certain components.”
The topic of national security risks surrounding connected vehicles has been around for quite some time, with a group of legislators last November bringing forward concerns that Chinese companies could collect and misuse sensitive data in autonomous vehicle tests.
“The national security risks are quite significant,” said Gina Raimondo, Commerce Secretary, in a statement in May. “We decided to take action because this is really serious stuff.”
The news comes after the U.S. increased tariffs on Chinese electric vehicles (EVs) in May, in order to stave off cheap competitors to U.S.-built products. The EU lodged also launched tariffs on Chinese EVs last month, and Canada is considering similar legislation.
It also comes as multiple companies have gained approval to test autonomous driving tech in China, including domestic makers Nio, BYD, Changan Auto, GAC, SAIC, BAIC BluePark, China FAW Group, SAIC Hongyan, and Yutong Bus. Over the weekend, Mercedes-Benz became the first foreign company to gain approval for Level 4 autonomous driving tests in China, and Tesla is expected to gain full approval for its Full Self-Driving (FSD) Supervised later this year.
Tesla China to test 10 FSD vehicles ahead of expected public rollout: report
What are your thoughts? Let me know at zach@teslarati.com, find me on X at @zacharyvisconti, or send us tips at tips@teslarati.com.
News
CES 2026 validates Tesla’s FSD strategy, but there’s a big lag for rivals: analyst
Ferragu shared his insights in a series of posts on social media platform X.
Longtime Tesla (NASDAQ:TSLA) bull and New Street Research analyst Philippe Ferragu has described CES 2026 as “The Great Validation Chamber” for Tesla’s autonomous driving efforts.
Ferragu shared his insights in a series of posts on social media platform X.
In a thread on X, Ferragu highlighted two key events that validated Tesla’s autonomy strategy at CES 2026: Mobileye’s focus on cost-efficient L2+ hardware and NVIDIA’s “Alpamayo,” which uses artificial intelligence to accelerate the development of autonomous driving systems.
As per the analyst, however, the validation of Tesla’s strategy on autonomous driving does not mean that the industry is catching up to the electric vehicle maker. Ferragu noted that ultimately, the industry still likely has a 12-year lag against Tesla.
“CES 2026 = The Great Validation Chamber for Tesla. The signal from Vegas is loud and clear: The industry isn’t catching up to Tesla; it is actively validating Tesla’s strategy… just with a 12-year lag. Two critical takeaways solidify our thesis:
“1) Mobileye validates the strategy but flies lower and behind. Great win for Mobileye; white flag for western OEMs, abandoning the L4 dream to standardize cost-efficient L2+ hardware. Standardizing the equivalent of HW2 (2016) for 2028 – 12 years behind.
“2) Nvidia validates the Tesla stack with ‘Alpamayo,’ pivoting Physical AI towards Reasoning – Total vindication of FSD V13/V14’s architecture. Go to market will be the issue: Nvidia provides the kitchen (chips/models), but legacy OEMs still have to cook. Good luck with that,” Ferragu wrote in his thread on X.
Elon Musk, for his part, has responded to some of CES 2026’s developments on X. In response to comments on X about Alpamayo seemingly becoming a potential competitor to FSD, Musk stated that he is hoping Nvidia succeeds in its autonomous driving efforts.
That being said, Musk predicted that what “they will find is that it’s easy to get to 99% and then super hard to solve the long tail of the distribution.” He also noted that rivals systems such as Alpamayo will likely only put competitive pressure on Tesla in 5 or 6 years, or possibly even longer, considering the pace of the automotive industry as a whole.
News
Elon Musk gives honest take on when Tesla will see serious FSD competition
Musk’s comments came on the heels of NVIDIA’s announcement of its Alpamayo system, which also uses AI to accelerate the development of autonomous driving solutions.
Elon Musk has provided a candid estimate on potential challengers to Tesla’s Full Self-Driving (FSD) technology.
Musk’s comments came on the heels of NVIDIA’s announcement of its Alpamayo system, which also uses artificial intelligence to accelerate the development of autonomous driving solutions.
Elon Musk on NVIDIA’s Alpamayo
Following NVIDIA’s announcement, Tesla community members took to X to ask the CEO about his thoughts on Alpamayo, which seemed like a direct competitor to FSD. The fact that Alpamayo also uses AI to navigate real-world roads resulted in many arguing that the system could spell the end of Tesla’s autonomous driving aspirations.
In a response on X, Musk acknowledged that NVIDIA’s Alpamayo is doing exactly what Tesla is doing. And while he seriously hopes NVIDIA will succeed, Musk predicted that “they will find is that it’s easy to get to 99% and then super hard to solve the long tail of the distribution.”
FSD’s competition
In later posts, Musk also responded to a post discussing FSD’s progress and its potential competition in the future. In response to a longtime Tesla community member who noted that Alpamayo’s arrival does not mean FSD is doomed, Musk stated that this will indeed be the case. He then noted that, given how Tesla’s rivals operate, solutions like Alpamayo will only exert competitive pressure on Tesla in about 5-6 years, or perhaps longer.
“You’re right. The actual time from when FSD sort of works to where it is much safer than a human is several years. The legacy car companies won’t design the cameras and AI computers into their cars at scale until several years after that. So this is maybe a competitive pressure on Tesla in 5 or 6 years, but probably longer,” Musk wrote in his response on X.
News
Tesla rolls out tasty new trade-in deal for a limited time
Tesla has rolled out a tasty new trade-in deal in the United Kingdom for a limited time, knocking just over the equivalent of $5,000 off of the price of a new or inventory Model 3 or Model Y.
Tesla has rolled out a tasty new trade-in deal in the United Kingdom for a limited time, knocking just over the equivalent of $5,000 off of the price of a new or inventory Model 3 or Model Y.
The move, which could be a great way to incentivize sales in the United Kingdom, will take off £3,750 ($5,043) from the price of either of Tesla’s two most popular models, but it’s only valid until March 31, 2026. It requires the order and delivery to take place within the first quarter to qualify for the discount.
NEWS: Tesla UK is offering a £3,750 ($5,043 USD) trade-in bonus towards a new Tesla if you trade in your current car.
Must order and take delivery before March 31, 2026. pic.twitter.com/ZBLoZaLMvT
— Sawyer Merritt (@SawyerMerritt) January 2, 2026
The bonus is designed to lower the cost barrier for switching to electric vehicles, stacking the £3,750 on top of the actual trade-in value of any eligible car — this includes petrol, diesel, or even an EV from another automaker. It applies to both new builds and inventory vehicles, including test drive and showroom models, but excludes certified pre-owned Teslas.
This promotion comes amid intensifying competition in the European EV sector. Chinese giant BYD, which snatched the EV sales title from Tesla for 2025, has been aggressively expanding in the European market, undercutting prices and capturing market share with its widely affordable models, including the Seagull.
Tesla’s strategy echoes similar incentives that have been offered in other markets at different times. With UK EV adoption hovering around 20 percent of new car sales in 2025, such deals could accelerate the transition, especially as government mandates phase out fossil fuels by 2035.
There have been enthusiastic reactions to the offer on X, the social media platform owned by Tesla CEO Elon Musk. These incentive programs are few and far between, and are never predictable in terms of availability. However, Tesla could be using this discount to get the year off to a good start.
For potential buyers, the deal underscores Tesla’s agility in a competitive landscape. As EV infrastructure improves and battery tech advances, incentives like this could tip the scales for those who might be more hesitant to make the jump.
With Q1 2026 deliveries ramping up and Tesla coming off a yearly decline in deliveries, the company is undoubtedly looking to push things forward and get the year off to a great start.
CES 2026 validates Tesla’s FSD strategy, but there’s a big lag for rivals: analyst
Elon Musk gives honest take on when Tesla will see serious FSD competition
