Automakers that have been selling certain China-built models in the United States for years are now working to obtain government permissions to keep those vehicles on sale, after a new U.S. rule effectively bars most Chinese-developed and -maintained software from cars sold in the country.
Ford confirmed it has submitted an application to the U.S. Commerce Department to continue importing the Lincoln Nautilus SUV assembled in China. Ford said the Nautilus’ software was developed in the United States but loaded into the vehicle in China, a detail that triggers the need for government authorization under the new regulation.
The Lincoln Nautilus is part of a narrow set of vehicles that had already been entering the U.S. market prior to the imposition of the restrictions. Ford told regulators that it expects to begin importing 2027 model year Nautilus units in January, which gives the company several months to secure the authorization it has requested.
Licensing process and industry exposure
The pursuit of exemptions and authorizations has led automakers to navigate a licensing regime that industry participants describe as complex and not always transparent. The process has also underscored the extent to which U.S. vehicle production and aftermarket systems are entwined with Chinese development and assembly operations.
The rule, adopted in January 2025 under President Joe Biden and retained under the subsequent administration, was framed on national security grounds tied to the capacity of modern vehicles to collect sensitive data on U.S. owners. It places a broad ban on most software developed or maintained in China and applies to companies with meaningful Chinese ownership stakes. Lawmakers have since suggested potential further tightening of the rules.
Timing and the next phase: hardware restrictions
The software prohibitions take effect for model year 2027. Separate hardware restrictions will start for model year 2030, a shift that industry analysts and researchers expect will be more disruptive and time-consuming to implement.
Researchers at the Rhodium Group, cited in commentary on the issue, highlighted that restrictions on hardware will likely prove more cumbersome and require greater adaptation time from automakers. The implication is that while software rules are already creating near-term headaches for specific models, the broader challenge will come as companies seek to decouple physical supply chains from China.
Notable company responses and movements
Some manufacturers have begun reworking supply or production plans in anticipation of the tighter hardware rules. General Motors announced plans to move production of the Buick Envision, a model currently built in China, to a factory in Kansas starting in 2028.
Volvo Cars, which is majority-owned by Zhejiang Geely Holding Group, said in May that it had received an authorization to sell its vehicles in the U.S., while noting it still must ensure that its entire U.S.-sold lineup complies with the regulation’s specifications. The specific nature of finished authorizations and applications is difficult to track because the Commerce Department does not publish details of authorization requests or decisions, leaving observers uncertain about how many companies have sought similar relief. The department did not comment on the record.
Automakers that may need to apply for authorizations include Polestar, which is majority-owned by Geely, and GM, because of its China-built Buick Envision. Both companies declined to say whether they had submitted applications when queried. Polestar said it is working with U.S. officials to meet the new requirements.
Suppliers face practical challenges
Parts suppliers are also contending with the new restrictions. Industry groups warned before the rule’s finalization that disentangling software and hardware developed by international teams could be challenging in practice.
In comments to the Commerce Department’s Bureau of Industry and Security in late 2024, the Motor & Equipment Manufacturers Association (MEMA) observed that suppliers develop software and hardware with global teams and asked rhetorically, "would the restrictions be applicable to a single line of code?" This comment reflects concerns about how granular enforcement might be and how difficult compliance could become for suppliers with distributed development footprints.
Tiremaker Pirelli also flagged that one of its products risked falling under the ban because of a significant Chinese shareholder. Italy reacted by limiting the number of board members that shareholder could appoint, and Pirelli said in May it would begin producing the affected product at a U.S. plant.
What remains uncertain
Because the Commerce Department does not make authorization filings and decisions publicly available, the universe of automakers and suppliers seeking exemptions is not fully visible. That opacity compounds the operational uncertainty for manufacturers planning production and supply changes ahead of the software and hardware compliance deadlines.
Automakers and suppliers now face a phased compliance timeline: software-related changes are pressing and immediate for certain models, while the hardware restrictions pose a longer runway but potentially greater reconfiguration costs and supply-chain work.