Hyundai and Kia’s vehicle connectivity service (Image courtesy of Hyundai Motor Co.)
SEOUL, Sept. 24 (Korea Bizwire) – The U.S. government’s decision to phase out the sale of vehicles using Chinese or Russian software and components in autonomous driving and communication systems has drawn attention to its potential impact on South Korean automakers and parts suppliers.
Industry analysts predict that this move by the U.S. administration could prove more beneficial than detrimental for South Korean automotive companies, including Hyundai Motor and Kia, as they rarely use software from the prohibited countries.
According to automotive industry sources, the U.S. Department of Commerce recently announced regulations prohibiting the import and sale of vehicles equipped with specific hardware or software linked to China or Russia in their vehicle connectivity systems (VCS) or autonomous driving systems (ADS).
The ostensible reason for these new regulations is to preemptively block security threats to the United States from the import and sale of connected vehicles incorporating technology from hostile nations.
However, industry experts interpret this as part of a broader U.S. strategy to counter China, protect domestic industries, and reorganize supply chains around American interests — similar to the logic behind electric vehicle battery regulations.
For South Korean automakers, who are locked in fierce competition with Chinese companies in the electric vehicle and connected services sectors, these regulations are likely to present more opportunities than challenges.
Hyundai Motor Group, South Korea’s largest and the world’s third-largest automaker, is expected to strengthen its position in the U.S. import market, where competition with Chinese electric vehicles was anticipated.
The company develops and installs its own software for autonomous driving and other functions, exempting it from the new regulations.
A prime example of this shift is Google’s autonomous driving subsidiary, Waymo, which had initially selected Chinese automaker Geely’s Zeekr electric vehicle for its sixth-generation autonomous driving system.
Due to tariff issues, Waymo is now considering Hyundai’s Ioniq 5 as a replacement.
According to Reuters, high-level executives from Hyundai and Waymo have met at least three times at Waymo’s U.S. headquarters to discuss using the Ioniq 5 for the sixth-generation autonomous driving system and potential contract manufacturing arrangements.
Other South Korean automakers are also well-positioned to navigate these new regulations.
GM’s global connectivity service OnStar (Image courtesy of GM Korea)
GM Korea’s exports to the United States, including the Chevrolet Trailblazer and Trax crossover, are equipped with GM’s global connectivity service OnStar, likely exempting them from the impact of these regulations.
Renault Korea and KG Mobility (KGM) are not expected to face immediate consequences as they currently do not export to the U.S. market.
However, KGM may need to consider these regulations for future U.S. market entry, as some of their vehicles use Chinese software and hardware.
The South Korean auto parts industry might also benefit from these regulations, potentially filling the void left by banned Chinese and Russian components.
However, industry insiders note that while tier-1 suppliers may be prepared for this shift, tier-2 suppliers might require government support to develop vehicle software and cybersecurity technologies.
Jang Hong-chang, a senior researcher at the Korea Automotive Technology Institute, emphasized in a recent report that “not only Chinese parts companies but also global parts companies using Chinese technology and components could be affected by the sanctions.”
He added, “We should connect the U.S. regulations on Chinese cybersecurity technology to export opportunities for domestic auto parts,” calling for active technical consulting and human resource development support to strengthen the cybersecurity response capabilities of South Korean parts companies.
Kevin Lee (kevinlee@koreabizwire.com)
