By David Shepardson

WASHINGTON, Jan 14 (Reuters) - President Joe Biden's outgoing administration is finalizing rules on Tuesday that will effectively bar nearly all Chinese cars and trucks from the U.S. market, as part of a crackdown on vehicle software and hardware from China.

Washington's latest move against Chinese vehicles comes after the Commerce Department said this month it was considering a similar crackdown on Chinese-made drones, in the wake of last year's steep tariff hikes on imports of its electric vehicles.

"It's really important because we don't want two million Chinese cars on the road and then realize ... we have a threat," Commerce Secretary Gina Raimondo told Reuters in an interview, citing national security concerns.

In September, her department proposed a sweeping ban on key Chinese software and hardware in connected vehicles on American roads, with software prohibitions to take effect in the 2027 model year and those on hardware in 2029. They also bar Chinese car companies from testing self-driving cars on U.S. roads.

The rules also cover Russian vehicles and components.

The U.S. Commerce Department said in the final rules it was making some changes, such as exempting vehicles heavier than 10,000 pounds from the requirements, which would let China's BYD 002594.SZ continue to assemble electric buses in California.

On Monday the department said it planned to soon propose rules barring Chinese software and hardware in larger commercial vehicles, including trucks and buses. A final decision will be up to the incoming Trump administration.

In a shift, the department said the bans would not cover Chinese software developed before the new rules took effect, so long as it was not being maintained by a Chinese firm.

That means General Motors GM.N and Ford F.N could potentially continue to import some Chinese-made vehicles for U.S. buyers, a senior official told reporters.

The Alliance for Automotive Innovation, representing GM, Toyota Motor 7203., Volkswagen VOWG_p.DE, Hyundai Motor 005380.KS, and other major automakers, unsuccessfully sought an additional year to meet the hardware requirements.

Polestar, the Swedish automaker that is a brand of China's Geely [RIC:RIC:GEELY.UL] warned in October that without changes the Commerce rule would "effectively prohibit" it from selling vehicles in the United States.

An administration official said officials expect Polestar would need to seek specific authorization under the final rule. Polestar declined to comment.

In September, the Biden admnistration finalized steep tariff hikes on Chinese electric vehicle imports and this month it put key Chinese battery company CATL 300750.SZ on a list of firms accused of aiding the country's military.

President-elect Donald Trump, who takes office on Jan. 20, wants to prevent Chinese auto imports but is open to Chinese automakers building vehicles in the United States.

(Reporting by David Shepardson; Editing by Clarence Fernandez)

((David.Shepardson@thomsonreuters.com; 2028988324;))