Among the geopolitical risks around EVs and connected vehicles, US regulation is one that is often described inaccurately. A summary like "a full ban on Chinese parts in 2025–2026" is out of step with the rule's actual structure. It is, accurately, a phased entry keyed to model year (MY), and its scope is limited.
The connected-vehicle final rule from the US Commerce Department's Bureau of Industry and Security (BIS) was published in the Federal Register on 16 January 2025 and took effect on 17 March 2025. The rule aims to exclude from connected vehicles specific technologies designed, developed, manufactured, or supplied by entities linked to China and Russia.
The Phased-Entry Roadmap
The final rule takes a staggered approach that widens scope over time. The key points are as follows.
Software: model year 2027
Prohibitions on software related to Vehicle Connectivity Systems (VCS) and Automated Driving Systems (ADS) apply first, from MY2027. Software designed, developed, or supplied by China/Russia entities is covered.
Hardware: model year 2030
Hardware prohibitions apply from MY2030 onward (1 January 2029 for units without a model year). At that point the rule covers both software and hardware.
PRC/Russia-nexus makers: MY2027
Sales of connected vehicles by makers with a sufficient nexus to China/Russia are banned from MY2027 — even for vehicles built in the US.
What matters here is that the rule's scope is limited to VCS and ADS — the vehicle's connectivity and automated-driving functions. Not every Chinese part in a vehicle is excluded at once. Also, the "effective date (March 2025)" and the "start of prohibition (MY2027–2030)" are different concepts; conflating them leads to mis-estimating the timing of impact.
Practical Supply-Chain Impact
What this rule confronts suppliers and OEMs with is the task of mapping "what is banned, and when" onto their own supply chains.
First, an inventory of which of your products' parts and software qualify as VCS/ADS. Second, checking whether their suppliers have a China/Russia nexus. Third, identifying which model years the affected models fall under. Only by multiplying these together do the priorities and lead times come into view.
Given design-freeze lead times, the MY2027 software requirements are effectively already in the preparation window. Dual-sourcing communication modules and automated-driving stacks for the regulated bloc and the growth bloc — so-called Dual-Track — becomes a realistic option.
"Division" and "Interdependence" Coexist
US regulation, together with Europe's countervailing duties on China, works to split the market into a regulated bloc (US, Europe, Japan) and a growth bloc (the Global South). At the same time, the reality that Western brands' core components and batteries depend on Chinese manufacturing or Chinese technology licensing makes full decoupling difficult.
In other words, the market is split by political logic while interdependence persists at the technology and components layer. Premised on this duality, mid-term competitiveness will hinge on whether you can build flexible manufacturing and procurement that can plug-and-swap communications, automated-driving software, and batteries according to a destination's geopolitical risk.
China's exports and tariff-bypass moves are covered in China NEV: Price War Cools as Exports Surge.
Reference FactCards
> Source: Federal Register, "Securing the ICTS Supply Chain: Connected Vehicles" (published 16 January 2025); BIS (effective 17 March 2025). The phased entry of software MY2027 / hardware MY2030 is based on the same final rule.