Major automakers are urging Congress to enact a permanent ban on Chinese connected vehicles, hardware, and software before the end of the year.
Automakers Demand Legislative Action Before Congress Adjourns
Major car manufacturers operating in the United States are ratifying pressure on federal lawmakers to take swift legislative action. The Alliance for Automotive Innovation, a trade group representing the vast majority of companies selling vehicles domestically, sent a formal letter on Thursday calling on congressional leaders to pass a permanent statutory ban before lawmakers adjourn for the year. The push targets the domestic sale, import, and manufacturing of Chinese connected vehicles, along with high-risk hardware and software. Right now, Chinese automakers are dumping subsidized vehicles with connected software and hardware around the world,
John Bozzella, CEO of the group, said in the letter seen by CNBC. The Alliance for Automotive Innovation represents General Motors, Ford, Toyota, Volkswagen, Hyundai, Honda, Stellantis and other major automakers.
Global Market Expansion and Data Collection Concerns
The trade organization’s urgency stems from the rapid expansion of China-based automotive giants into international markets. Companies such as BYD and Geely Auto Group are scaling up exports across Europe, Australia, Southeast Asia, Mexico, and South America. In Canada, under a January trade deal, China’s Geely Auto Group will be allowed to sell tens of thousands of EVs in the country every year, with Canadian tariffs set to drop from 100% to just 6%.
Industry executives argue that these vehicles act as sophisticated collection devices. Modern connected cars incorporate advanced sensors, Bluetooth, Wi-Fi, cellular connectivity, and satellite communications technologies covered under rules based on national security concerns linked to the ability of vehicles to collect sensitive data on American owners.
China is capturing market share in Europe, Australia, Southeast Asia, Mexico and South America with vehicles capable of collecting, processing and transmitting sensitive vehicle and consumer data to the Chinese Communist Party,
Bozzella wrote.
The trade group maintains that enacting a permanent ban on Chinese vehicles and high-risk hardware and software will send a clear and bipartisan message that China’s strategy to dominate global automotive manufacturing will be met with a national security policy response from the American government.
Legislative Hurdles and Ownership Complications in Washington
Efforts on Capitol Hill face a complex political landscape alongside upcoming midterm elections in November, which could affect Congress’ momentum. Lawmakers in both chambers have advanced bipartisan efforts to address Chinese vehicles. In July, the Senate Commerce Committee approved legislation to toughen a government ban on Chinese automakers entering the American market, though it still faces hurdles to winning final passage.
Republican Senator Bernie Moreno of Ohio and Senator Elissa Slotkin, a Michigan Democrat, proposed legislation to codify a regulation imposed by the Biden administration that effectively bans all Chinese automakers from selling or building passenger vehicles in the U.S. and takes other steps to prevent China from entering the U.S. light-duty market. The Alliance in July urged the committee to consider as part of the legislation explicitly prohibiting the Commerce Department from granting specific authorizations to Chinese automakers such as BYD, Chery, SAIC Motor and others subsidized by the Chinese Communist Party to manufacture, sell or import connected vehicles to the U.S.,
according to a previously unreported letter.
However, specific provisions within these proposed bills have sparked friction among lawmakers and legacy manufacturers. Senate Commerce Committee Chair Ted Cruz said a provision in the bill that would ban companies with more than 15% ownership by Chinese entities would bar Mercedes-Benz from selling vehicles in the United States because of its nearly 20% passive Chinese investment. Cruz said the bill required changes before it could become law. The Alliance for Automotive Innovation, which includes Mercedes-Benz, said in the Thursday letter that it wants to work with lawmakers to achieve a balanced policy so all our member companies continue to succeed and thrive inside the U.S.
Simultaneously, trade pressures continue to reshape corporate footprints. In June, Polestar said the administration was forcing the electric-vehicle maker to stop selling vehicles in the U.S. beginning in the 2027 model year. The Sweden-based company is majority-owned by China’s Geely Holding. Meanwhile, the Chinese embassy in Washington said it opposed the effort and said Beijing has abolished market access restrictions on foreign investment in manufacturing and remains open to international car makers who can fully share in the dividends of China’s big market. Tesla, Buick, Toyota, and Ford have been household names in China.
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