AMERICA’S largest automotive industry lobby group has urged Congress to permanently lock Chinese-made connected vehicles, software, and hardware out of the United States before the end of 2026, escalating a bipartisan campaign aimed at preventing Chinese brands gaining the foothold they have established in markets including Australia.
The Alliance for Automotive Innovation, whose members include General Motors, Ford, Toyota, Volkswagen, Hyundai, Honda, and Stellantis, wants lawmakers to pass the Connected Vehicle Security Act of 2026 before the current Congress adjourns.
The proposed legislation would turn existing regulatory restrictions into law and broaden Washington’s ability to exclude vehicles, software, and critical connectivity hardware linked to China and other designated foreign adversaries.
Alliance president and CEO John Bozzella said Chinese manufacturers were “dumping subsidised vehicles with connected software and hardware around the world”, specifically naming Australia among the markets where Chinese brands are rapidly gaining share.
“This hasn’t happened inside the US yet,” he said, urging Congress to make the restrictions permanent before year-end.
The request comes after the US Senate Commerce Committee unanimously advanced the bipartisan Connected Vehicle Security Act in July.
Introduced by Republican senator Bernie Moreno of Ohio and Democratic senator Elissa Slotkin of Michigan, the bill is intended to codify and strengthen restrictions introduced by the Biden administration in January 2025.
Those rules already effectively prevent Chinese vehicle manufacturers from establishing a conventional presence in the US new-car market.
From model year 2027, the US Bureau of Industry and Security prohibits the sale of connected vehicles by manufacturers sufficiently linked to China or Russia, as well as vehicles using covered connectivity or automated-driving software originating from those countries.
Restrictions on specified connectivity hardware are scheduled to follow from model year 2030, or from January 1, 2029, for components not associated with a model year.
Washington argues that modern connected vehicles – equipped with cellular communications, Bluetooth, Wi-Fi, satellite links, microphones, cameras, and location systems – can gather significant quantities of personal and geographic data and, potentially, be accessed or manipulated remotely.
The new legislation would go further by putting those protections on a statutory footing, reducing the ability of a future administration to unwind them.
The Alliance has also called for Congress to prevent the Commerce Department granting exemptions that could allow major Chinese manufacturers including BYD, Chery, and SAIC Motor to manufacture, import or sell connected vehicles in the US.
It is an extraordinary position for a market that for decades championed open automotive trade, but one enjoying broad support from manufacturers, unions, and politicians from both major US parties.
However, lawmakers are still working through potentially significant unintended consequences.
Senate Commerce Committee chair Ted Cruz has warned that a provision targeting companies with more than 15 per cent Chinese ownership could inadvertently exclude Mercedes-Benz, in which Chinese investors hold almost 20 per cent.
Polestar has already become an early casualty of the tightening rules.
The Swedish-headquartered EV manufacturer, majority owned by China’s Geely Holding, said in June it would cease US sales from the 2027 model year.
China has rejected the push, arguing that it has removed restrictions on foreign investment in manufacturing and remains open to overseas automotive manufacturers.
The Chinese embassy in Washington pointed to established foreign brands including Tesla, Buick, Toyota, and Ford operating successfully in China, while opposing attempts to further restrict Chinese vehicles.
The dispute is becoming particularly complicated for Ford.
Just days after the Alliance renewed its push for a permanent Chinese-vehicle ban, US Transportation Secretary Sean Duffy criticised Ford’s relationships with Chinese battery giant CATL and car-makers Geely and BYD, describing the links as a national-security concern.
Ford uses licensed CATL battery technology at its Marshall, Michigan battery plant and continues to source the Lincoln Nautilus from China, while also developing broader relationships with Chinese manufacturers.
Ford rejected Mr Duffy’s criticism as “wrongheaded”, stressing that it owns and controls its US battery plant and employs the workforce there.
The political pressure stands in sharp contrast to Ford’s strategy elsewhere, particularly Australia.
This week Ford Australia confirmed it will add two Chinese-built vehicles to its local line-up – the Transit City battery-electric van and Bronco Basecamp range-extender SUV, both manufactured by long-time joint-venture partner Jiangling Motors Corporation (JMC) in Nanchang.
Ford Australia and New Zealand president and CEO Fadi Mawal said the company must broaden its local range quickly as electrification, emissions regulations, and an influx of new competitors reshape the market.
That approach illustrates just how differently Australia and the US are responding to China’s rapidly expanding automotive industry.
Australia has no comparable country-specific prohibition on Chinese-built passenger vehicles, and Chinese manufacturers have capitalised accordingly.
In August, five Chinese marques – BYD, GWM, MG, Geely and Chery – ranked inside Australia’s top 10, collectively accounting for 26.4 per cent of VFACTS-reported sales.
China was also Australia’s largest source of new vehicles during the month, supplying 43,882 units – up 88.9 per cent year on year – ahead of Japan, Thailand, South Korea, and Germany.
The disparity is particularly striking given the Alliance itself cited Australia as evidence of the speed with which Chinese manufacturers can build market share once established.
Australia is not ignoring connected-vehicle security. The Australian Cyber Security Centre has issued guidance noting the increasing amount of information collected and communicated by internet-connected vehicles, while federal, state and territory governments are developing national frameworks for connected and automated transport technology.
But Canberra has so far stopped well short of the sweeping restrictions being pursued in Washington.
The US industry argues that acting before Chinese brands establish local scale is the point.
With Chinese manufacturers expanding aggressively across Europe, Australia, South-East Asia, Mexico, and South America – and China’s vehicle exports continuing to climb as its domestic market weakens – US car-makers appear determined not to find out whether they can compete with that expansion on home soil.
For Washington, the question is increasingly not whether Chinese cars should be restricted, but how permanent and comprehensive the barrier should become.