• The Alliance for Automotive Innovation is urging lawmakers to pass a permanent ban on Chinese connected vehicles before the current Congress ends on January 3, 2027.
  • A dispute over an ownership threshold that could capture Mercedes-Benz (MBG.DE) has stalled the bill, pushing action until after the midterm elections.
  • Honda (HMC) has called for coordination with Canada and Mexico, framing the issue as a North American supply-chain matter.

Industry Push Intensifies

A coalition representing nearly every major automaker is mounting a last-ditch effort to cement restrictions on Chinese connected vehicles into federal law, pressing lawmakers to act when they return for the post-election session. The Alliance for Automotive Innovation, whose members include GM (GM), Ford (F), Toyota (TM), Volkswagen (VWAGY), Hyundai (HYMTF), Honda, and Stellantis (STLA), wrote to congressional leaders on September 3 urging them to prohibit Chinese connected vehicles, hardware, and software before the current Congress expires on January 3, 2027.

The push comes after a bipartisan bill—the Connected Vehicle Security Act, sponsored by Senators Bernie Moreno and Elissa Slotkin—stalled before the election recess. The bill would write into statute restrictions currently enforced through a Commerce Department rule finalized in January 2025, which phases in bans on connected vehicles and software linked to China or Russia starting with model year 2027. Supporters argue that a statutory ban would be harder for future administrations to undo. "What we need is permanence," said John Bozzella, president of the Alliance, in an interview. "An executive rule can be reversed with a stroke of a pen."

Mercedes-Benz Dispute Becomes Flashpoint

The legislative effort hit a snag in late September when sponsors sought expedited Senate passage. Negotiations with Republican Senator Rand Paul delayed action, with an ownership threshold emerging as the central sticking point. The Senate committee version would capture companies with more than 15% Chinese ownership, a provision that could ensnare Mercedes-Benz, which has nearly 20% passive Chinese ownership. Moreno said on September 29 that lawmakers did not intend to ban Mercedes-Benz, but Paul objected to legislation he viewed as unfairly targeting the company. Volvo Cars (VOLCAR-B.ST), majority-owned by China's Geely (0175.HK), also found its position under discussion. By October 1, reporting indicated that further action would have to wait until after the midterm elections.

The impasse highlights the difficulty of crafting rules that target Chinese control without sweeping in established manufacturers with minority Chinese investors. A person familiar with the negotiations said talks have continued informally, but no breakthrough has been reached. Spokespeople for Paul and Moreno did not respond to requests for comment.

Honda Seeks Regional Coordination

Amid the legislative wrangling, Honda's U.S. public-policy leadership called on October 29 for coordination with Canada and Mexico and other allies, signaling that automakers increasingly view the issue as a North American supply-chain matter rather than simply a U.S. import question. The company argued that a patchwork of regional rules could complicate enforcement and investment decisions across integrated production networks.

The broader context is China's rapid export surge. BYD (1211.HK), a major Chinese electric-vehicle manufacturer and an expressly named target of the industry's request, reported October vehicle sales rose 11% year over year to 490,168 units, while overseas shipments jumped 102.8% to 170,194. Third-quarter profit rose 28%, below forecasts, as export competition intensified and domestic demand remained weak. "Chinese exports are subsidized and constitute dumping," Bozzella said, an allegation not established by the proposed bill.

What's Next

The path forward hinges on whether sponsors can resolve the ownership and exemption language, overcome objections to expedited passage, and secure House action during the remaining session. The House version had more than 100 co-sponsors by late September, but strong support has not eliminated procedural and substantive obstacles. A technology-policy expert quoted in October's reporting, James Lewis of the Center for European Policy Analysis, said the measure could return after the elections, citing the competitive threat Chinese carmakers pose to U.S. companies. That supports the possibility of renewed action—not certainty of enactment.

If enacted broadly, the law could restrict Chinese manufacturers' options for accessing the U.S. through both imports and local manufacturing, and could encourage changes to ownership or technology sourcing among other affected companies. If it fails, the existing Commerce restrictions would remain a separate policy barrier; failure would not itself open the U.S. market. The most consequential details to monitor are the final definition of Chinese ownership or control, treatment of Mercedes-Benz and Volvo, availability of waivers, and coordination with Canada and Mexico.

Correction: An earlier version of this article misstated the date of the Alliance's letter to congressional leaders. It was sent on September 3, not September 30.