The U.S. Commerce Department is expected on Monday to propose prohibiting Chinese software and hardware in connected and autonomous vehicles on American roads due to national security concerns, two sources told Reuters.
NIO shares dropped 2.7% in premarket trading.
The Biden administration has raised serious concerns about the collection of data by Chinese companies on U.S. drivers and infrastructure as well as the potential foreign manipulation of vehicles connected to the internet and navigation systems.
The proposed regulation would ban the import and sale of vehicles from China with key communications or automated driving system software or hardware, said the two sources, who declined to be identified because the decision had not been publicly disclosed.
The move is a significant escalation in the United States' ongoing restrictions on Chinese vehicles, software and components. Last week, the Biden administration locked in steep tariff hikes on Chinese imports, including a 100% duty on electric vehicles as well as new hikes on EV batteries and key minerals.
NIO's management revealed production capacity plans for the L60, the first model from sub-brand Onvo, as the model appears to be gaining good initial acceptance.
Onvo L60 capacity is expected to reach 5,000 units in October and 10,000 in December, Nio founder, chairman and CEO William Li said.
By January 2025, the model's capacity will reach at least 16,000 units and 20,000 units by March, Li said.