Dozens of Israeli companies that provide hardware and software to the global automotive industry will be required to disclose information on their ties to China as a condition for participating in future supply contracts with Western vehicle manufacturers. This follows new US regulations designed to prevent the import of “smart” vehicles and vehicle components produced in China, out of national security considerations.
From January 2026, the regulations, published this month, prohibit the sale in the US of new vehicles that use software components, including operating systems, connected to “companies from hostile countries”, chiefly Russia and China. The prohibition also applies to Hong Kong. From January 2029, there will be a similar prohibition on the use of “smart” hardware components produced in China in vehicles sold in the US. Among these are power components for electric vehicles, and associated management systems, in which Chinese producers are dominant.
The prohibition will also apply to software and hardware components that are not directly manufactured and developed in China, but by companies controlled by Chinese companies or that have material Chinese investment. It will apply to US vehicle manufacturers, and also on manufacturers from Korea, Japan, and Europe, that sell or manufacture vehicles in the US.
Immediate response required
Industry sources say that despite the US regulations’ apparently long horizon, it obliges vehicle manufacturers to respond immediately, since they sign component supply contracts for future vehicles three years or more before the start of manufacture.
Several Israeli auto-tech companies have already received enquiries from Western vehicle manufacturers with which they work, asking them to disclose the “Chinese connections” in their global production chains, and Chinese investments in them.
In recent years, several Israeli auto-tech companies have started to operate production and R&D branches in China and Hong Kong, because of the developed and relatively cheap infrastructure that exists there in these fields.
Meanwhile, Israeli government agencies, among the Ministry of Transport and the National Cyber Directorate, have been working to regularize the cyber protection of vehicles in Israel for the long term. The work is intended to close potential security loopholes over the entire lifecycle of private and commercial vehicles sold in Israel. This will include technical definitions for cyber protection in imported vehicles, operating aspects, such as protection for charging stations for electric vehicles, and wireless communications with smart infrastructure. secured software updates from overseas servers.
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The main motivation is the fact that most new cars currently sold in Israel belong to the “connected cars” category, and have security loopholes that could be exploited to disrupt their operation remotely, to use them to gather sensitive information, or to damage sensitive national infrastructure. Another reason is the large number of smart cars produced in China that are sold in Israel, although the conclusions will not apply specifically to Chinese cars but to all cars.
Published by Globes, Israel business news – en.globes.co.il – on January 28, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.
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2025-01-28 09:28:52
