Volvo Cars has received authorization from the US government to continue importing and selling connected vehicles despite its majority ownership by China’s Geely Holding, clearing a key regulatory hurdle as the automaker expands its North American manufacturing footprint and broadens its product strategy to include both electric and hybrid vehicles. 

The approval follows regulations finalized by the Biden administration in January 2025 that effectively restrict most Chinese vehicles and vehicle technologies from entering the US market. The rules prohibit most software developed and maintained in China for connected vehicles beginning with the 2027 model year and apply to companies with significant Chinese ownership. 

“Because of our ownership structure, Volvo Car USA had to undergo a process with the US Department of Commerce to obtain a specific authorization allowing the continued import and sale of connected vehicles in the country,” Volvo said in a statement. “With this specific authorization, Volvo Cars can continue its growth plans in the United States.”

The automaker said the authorization was granted following what it described as “constructive discussions” with US government agencies regarding the company’s governance framework, technology architecture, and data security practices.

The decision provides greater certainty for Volvo’s US operations as the company increases local manufacturing capacity. In September, Volvo announced plans to begin production of a new hybrid vehicle in the United States before the end of the decade. The model is being developed specifically for the US market and is expected to increase utilization at the company’s manufacturing facility in South Carolina.

The company has also confirmed that production of the Volvo XC60 midsize SUV will begin in South Carolina in late 2026. Volvo CEO Håkan Samuelsson previously stated that the automaker intends to manufacture more vehicles in the United States as part of its long-term growth strategy. 

Currently, Volvo imports most of the vehicles it sells in the United States from Europe. The Volvo XC90 electric SUV remains the only model assembled in South Carolina. The company previously imported vehicles from China but halted those shipments following the implementation of US tariffs on Chinese-made automobiles.

The regulatory approval comes as Volvo continues to refine its electrification strategy. After previously targeting a fully electric lineup by 2030, the company revised its plans in 2025.

Volvo reported global sales of 153,316 vehicles in 1Q26, down 11% from the same period a year earlier. Fully electric vehicle sales increased 12%.

Battery-electric vehicles accounted for 23.7% of total sales during the quarter, while plug-in hybrids represented 23.6%. Combined, electrified vehicles made up 47.3% of total deliveries, one of the highest electrification rates among established premium automotive brands.

Regional performance reflected broader challenges facing the automotive industry. Sales in Europe and other international markets totaled 95,335 vehicles in the first quarter, a 2% decline year over year. Fully electric vehicle sales in those markets rose 21%, while electrified models accounted for 57% of total deliveries.

In the Americas, sales declined 28% to 29,651 vehicles. Volvo attributed the weaker performance to softer consumer sentiment, geopolitical uncertainty, and the elimination of incentives for electric and plug-in hybrid vehicles in several markets. 

The approval coincides with Volvo Group’s expansion in Mexico. The company is advancing construction of its heavy-duty truck manufacturing plant in Cienega de Flores, Nuevo Leon, which is expected to begin operations in 2026.