Is the long freeze on Chinese automakers selling cars in the US finally starting to thaw? China is currently the largest auto market in the world and has recently become the largest car exporter, surpassing Japan. Despite this global dominance, high tariffs and geopolitical tensions have effectively kept Chinese automakers away from American customers. Many of these vehicles are ready for primetime, offering features and performance that are fully competitive with current offerings in the United States.
Geely, recognized as China’s second-largest automaker, is among the companies aggressively seeking to sell their cars on American soil. However, the path to the US market is obstructed by two major obstacles: punitive import tariffs and strict new technology regulations. According to recent reports, Geely has successfully navigated the first hurdle, but the second remains a formidable challenge that could stall its expansion plans.
The first major barrier for any Chinese automaker entering the US is the significant financial penalty imposed on imports. The US government currently levies a 100% tariff on electric vehicles imported directly from China, making most models economically unviable for American consumers. Geely, however, holds a unique advantage over its competitors due to its ownership of Volvo Cars.
By leveraging Volvo’s existing global footprint, specifically its manufacturing plant in South Carolina, Geely can bypass these steep import duties. Manufacturing vehicles on US soil allows the company to “sail past” the tariff hurdle that blocks other Chinese giants like BYD. This strategy theoretically positions Geely to introduce its portfolio of brands—which includes Zeekr, Polestar, and Lynk & Co—to the US market at competitive prices.
While local manufacturing solves the tax problem, it does not address the second, perhaps more difficult hurdle: national security regulations regarding connected vehicle technology. The US Commerce Department has proposed rules that would ban the sale of connected vehicles containing software or hardware from countries of concern, specifically China and Russia.
These restrictions are designed to prevent foreign adversaries from accessing sensitive data collected by modern smart cars or potentially disabling vehicles remotely. The proposed timeline would ban Chinese software in vehicles starting with the 2027 model year, followed by a ban on hardware by the 2030 model year. This creates a complex regulatory environment where a car physically built in South Carolina could still be banned if its underlying operating system or communications modules are sourced from China.
Which Vehicles Will Be Impacted?
The definition of a “connected vehicle” under these new rules is broad, covering nearly all modern cars with Bluetooth, Wi-Fi, or cellular capabilities. This impacts not only future Geely-branded cars but also existing models under its umbrella. Vehicles like the Volvo S90 and Polestar 2, which have relied on Chinese manufacturing or supply chains, face scrutiny.
For Geely to successfully sell its next generation of EVs in the US, it cannot simply assemble Chinese kits in American factories. It effectively needs to “de-Sinicize” the digital brains of its vehicles, stripping out Chinese code and components to comply with US law. This requirement adds significant cost and complexity to the manufacturing process, potentially eroding the price advantage Chinese automakers typically enjoy.
Analysis
Geely serves as the ultimate test case for the US auto industry’s defensive measures. The company has proven that the “hardware” barrier—tariffs—can be circumvented through foreign direct investment and local manufacturing. However, the “software” barrier represents a new form of trade protectionism that is much harder to engineer around. If Geely, with its established Western partnerships and US factories, struggles to clear these regulatory hurdles, it suggests that the US market may remain effectively closed to independent Chinese brands for the foreseeable future.
What This Means
For American consumers, these developments mean that while Chinese-engineered cars may eventually arrive in showrooms, they will likely be heavily modified versions of their global counterparts. The expected wave of ultra-cheap Chinese EVs is unlikely to crash onto US shores anytime soon. Instead, buyers may see premium, compliant vehicles from brands like Polestar and Volvo that share Chinese DNA but adhere strictly to US software regulations, likely at a higher price point than originally anticipated.
Source: Original Article
