Automakers Want a Permanent U.S. Ban on Chinese Connected Vehicles

The U.S. auto industry is asking Congress to turn current restrictions on Chinese connected vehicles into a permanent law. The central argument is not simply about where a car is assembled: modern vehicles depend on software, wireless connectivity, data systems and hardware that can create security exposure as well as a route into the U.S. auto market. 129

What automakers want Congress to do

The Alliance for Automotive Innovation, representing major manufacturers including General Motors, Ford, Toyota, Volkswagen, Hyundai, Honda and Stellantis, has urged congressional leaders to permanently prohibit the sale, import and manufacture of Chinese connected vehicles in the United States. It also seeks restrictions on related Chinese software and hardware. 19

The industry wants action before the current Congress adjourns. Its goal is to put the restrictions in statute rather than leave them solely to executive-branch rules, which a later administration could change. 122

Why the industry says the ban is urgent

Automakers frame the issue as both industrial competition and national security. In its letter to Congress, the group said Chinese manufacturers are placing subsidized vehicles equipped with connected software and hardware into markets around the world. The group warned that the scale of that expansion could create a U.S. market foothold through vehicles or technology, even though it said this had not yet happened inside the United States. 1

The security concern centers on connected-vehicle systems. These systems can involve data collection, connectivity and vehicle hardware that policymakers view as sensitive. Existing U.S. connected-vehicle rules, adopted in January 2025, prohibit certain Chinese connectivity software in 2027-model vehicles and certain hardware beginning with model year 2030. 29

A permanent law would therefore serve two purposes: preserve the current regulatory direction and extend it to a more explicit, durable prohibition on Chinese- and other foreign-adversary-linked vehicles and technology. 2227

The Senate legislation: a broader statutory restriction

The Senate Commerce Committee approved bipartisan legislation intended to strengthen the existing restrictions. The Connected Vehicle Security Act, introduced by Sens. Bernie Moreno and Elissa Slotkin, would prohibit the importation, manufacture, sale and resale of connected vehicles, software and hardware linked to China or other foreign adversaries, including certain joint ventures and entities under their control. 227

The proposal is aimed at preventing Chinese automakers and Chinese-developed connected-vehicle technologies from reaching U.S. roads. Industry advocates specifically pressed lawmakers to prevent the Commerce Department from granting authorizations to Chinese automakers such as BYD, Chery and SAIC Motor. 6

Related legislation uses a broad test for covered vehicles: a connected vehicle could be barred if it originates in or was designed in a covered country, or if its manufacturer is a joint venture, subsidiary or other entity with more than 15% Chinese ownership, voting interest, board representation or other indicia of control. 2628

The 15% ownership problem—and Mercedes-Benz

The proposed ownership threshold illustrates how the legislation could extend beyond Chinese brands. Senate Commerce Committee Chair Ted Cruz warned that a rule barring automakers with more than 15% Chinese ownership could cover Mercedes-Benz, whose Chinese investors collectively hold nearly 20% of the company. 213

That consequence has become a key unresolved issue. The legislation has advanced in committee, but the evidence available does not show final congressional passage or a final resolution of the ownership provision. Any enacted version could be narrowed, amended or paired with exceptions or waivers. 223

Polestar shows how far the current crackdown can reach

Polestar offers an example of why corporate ownership and technology links matter under these rules. The Swedish electric-vehicle maker, majority-owned by China’s Geely Holding, said it was forced out of the U.S. market after the Commerce Department declined to authorize its sales under the connected-vehicle rule; the restriction applies beginning with model year 2027. 1720

Its case shows that a policy focused on Chinese-linked connected technology can affect a brand that is not marketed as Chinese. Reuters reported that Polestar vehicles were no longer made in China but contained Chinese software and hardware, while the company was majority-owned by Geely. 21

China’s response

China has opposed U.S. restrictions on Chinese connected-vehicle technology. Its Commerce Ministry said the proposed ban had no factual basis, violated market-economy and fair-competition principles, and amounted to protectionism; it called on the United States to withdraw the restrictions. 34

That dispute captures the stakes of the congressional push. Supporters say a statutory ban is necessary to guard against connected-vehicle security risks and a subsidized industrial expansion. Beijing rejects that rationale. The final scope of U.S. policy will depend on whether Congress passes a bill—and how it resolves provisions that may capture manufacturers with significant Chinese investment but no Chinese consumer brand. 1234