Volvo gets US government approval to bypass Chinese connected-car ban

In a significant development, Volvo Cars received a favorable ruling from the US Department of Commerce yesterday, allowing the Swedish automaker to import connected cars into the US market. This decision comes despite a ban on vehicle software with Chinese links, which is set to take effect for model year 2027 onward. Volvo Cars, which is partly owned by China's Zhejiang Geely Holding, had apparently petitioned the government for an exemption.

The US automotive segment has a history of protectionism, with the 1964 "chicken tax" still responsible for the absence of foreign-built pickup trucks on American roads. More recently, there has been a bipartisan effort to restrict Chinese influence in the industry. In 2024, then-President Biden imposed a 100 percent tariff on Chinese imports, followed by a Commerce rule that prohibited imports of connected vehicles built by companies with ties to China.

The ban on Chinese-linked vehicle software is slated to take effect for model year 2027, while connected vehicle hardware will be forbidden from model year 2030 onward. However, automakers are allowed to petition the government for exemptions, and Volvo Cars' successful bid demonstrates that some leeway will be granted. The exemption granted to Volvo Cars suggests that the US government is willing to consider individual cases and grant exceptions to the ban on Chinese-linked vehicle software.

This development could have implications for other automakers with ties to China, potentially paving the way for similar exemptions in the future. The US government's approach to Chinese cars has been characterized by a rare instance of bipartisan agreement. Despite the change in administration, the policy stance on Chinese cars has remained largely consistent, reflecting concerns about national security and the potential risks associated with Chinese technology.