Can China’s Second-Largest Automaker Succeed in the U.S. Market?

Chinese automaker Geely is positioning itself to enter the U.S. market amid a thawing landscape for foreign auto manufacturers. As the world’s largest auto market and exporter, China has faced significant barriers that have kept its automakers from selling in the U.S. These include high tariffs and geopolitical tensions.

Geely’s Strategy for U.S. Market Entry

Geely has made progress by leveraging its control of Volvo Cars, which operates a manufacturing plant in South Carolina. This facility produces several models, including the Volvo EX90 electric SUV and Polestar 3. Geely aims to utilize this assembly plant to establish a foothold in the United States.

Regulatory Challenges Ahead

A critical challenge for Geely involves compliance with U.S. regulations regarding automotive technology. Any Chinese company selling vehicles in the U.S. must certify that their autonomous driving software and related systems are not developed or controlled by “countries of concern,” namely China and Russia. This regulation, initiated by the Biden administration and finalized during Trump’s presidency, will take effect in March 2025 for certain software, with a later deadline for hardware components.

• March 2025: Software regulations take effect for vehicles from model year 2027 onwards.
• 2030: Hardware regulations commence for vehicles produced in that model year.

The purpose of these rules is to mitigate national security risks, including the potential for foreign entities to access vehicle systems for unauthorized control or data gathering.

The Volvo Connection

Geely’s ownership of Volvo could play a key role in its strategy. Although Volvo is perceived as a Swedish brand, Geely has significantly controlled the company since 2010. Sources suggest that Volvo might navigate regulatory concerns more effectively due to its established presence and reputation in the U.S. market.

Collaboration with U.S. Authorities

Volvo’s representatives have indicated ongoing discussions with the U.S. Department of Commerce regarding compliance with the new software regulations. The aim is to ensure that all vehicles marketed in the U.S. meet necessary standards while maintaining Volvo’s established brand identity.

Compliance with the regulations entails a complex authorization process. Any manufacturer seeking to sell vehicles featuring restricted software must submit requests for specific authorizations. These requests not only cover the vehicle model but also the software and components used.

Future Prospects for Geely in the U.S.

Despite the challenges, Geely remains one of the most strategically positioned Chinese automakers for entering the U.S. market. However, it faces the monumental task of proving its software and technologies comply with U.S. regulatory demands. The political climate and regulatory landscape, which can evolve rapidly, will significantly influence Geely’s roadmap.

In particular, the relationship between the U.S. and China will continue to impact Geely’s prospects. Observers speculate that the effectiveness of regulations may depend on shifts in government policy. This uncertainty raises questions about the long-term feasibility of entering the U.S. market for Chinese automakers.

As Geely explores opportunities in the U.S. automotive landscape, its collaboration with Volvo and adherence to strict regulatory requirements will be essential components of its strategy. The path ahead may be fraught with hurdles, but Geely’s preparation and positioning could pave the way for a successful market entry.