The American automotive industry is accelerating the removal of Chinese equipment from smart cars, as Washington imposes strict restrictions for national security reasons.
Manufacturers are racing to replace connectivity components, software, and electronic units originating from China, in a new phase of technological and commercial decoupling between the world's two largest economies.
The ban changing the supply chain
According to Reuters, new American rules, adopted in January 2025 under the government of Joe Biden and retained by the government of Donald Trump, prohibit the use of connected vehicle software from China starting with the 2027 model year and Chinese hardware starting with the 2030 model year.
Although the deadlines seem distant, automakers design their new models years before their release, which means suppliers must already adapt their production lines.
The focus of the change is small electronic connectivity units, so-called modules, which allow vehicles to communicate wirelessly with external networks.
The opportunity for American suppliers
A plant of Eagle Wireless in Ohio constitutes a characteristic example of the new industrial race.
The company was created in late 2025, precisely due to the need of American automakers to reduce their dependence on Chinese suppliers.
Company president TJ Dembinski stated that demand has skyrocketed, as automakers seek alternative solutions.
Eagle Wireless started with about 140 employees and plans to reach 1,000 within the next three years. At the same time, it has increased its revenue forecasts for the year by nearly 100%, close to 100 million dollars.
The cost of decoupling from China
However, the transition to non-Chinese suppliers comes with a significant cost.
According to Eagle Wireless, the cost of its own modules remains 5% to 15% higher than corresponding Chinese products.
Automotive executives warn that replacing Chinese components can significantly increase production costs, particularly in areas such as driver assistance systems, electric vehicle batteries, and rare earths.
China dominates connectivity components
The challenge for the US is large, as China has acquired a dominant position in the global market.
According to Counterpoint Research, Chinese companies account for nearly half of global shipments of cellular IoT modules for automobiles.
Eagle Wireless competes with companies such as Rolling Wireless and LG, yet it still has a significant obstacle to overcome: it began its operations using technology licensed from Chinese Quectel Wireless Solutions, the world's largest manufacturer in the sector.
By 2030 it will have to replace this technology with its own, as new rules prohibit equipment that has been designed, developed, manufactured, or supplied by Chinese companies.
New battle for technological dominance
Washington argues that reliance on Chinese systems in connected vehicles creates risks for data protection and national security.
Beijing, for its part, accuses the US of violating market rules and restricting competition, arguing that the success of Chinese cars is due to their technological progress.
At the same time, certain automakers are trying to secure exemptions from the new rules.
Ford has requested permission to continue importing certain Chinese-made models, while Volvo, which belongs to Chinese Geely, has already received relevant approval.
The risk of new dependence
Analysts point out an irony in the new strategy: in their attempt to decouple from China, American companies may continue to depend on Chinese know-how.
Ilaria Mazzocco, deputy director at the Center for Strategic and International Studies (CSIS), notes that partnerships with Chinese companies may initially increase dependence, but perhaps constitute the fastest route to acquiring know-how.
The battle for a "de-Chinafied" car is just beginning, with Washington attempting to create a new production chain free of Chinese links, even if this means higher costs for industry and consumers.
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