Senate Bill Threatens Mercedes-Benz US Sales Over Chinese Ownership Stakes

The Senate Commerce Committee advanced bipartisan legislation Wednesday that could inadvertently ban Mercedes-Benz from selling vehicles in the United States. The Connected Vehicle Security Act of 2026 sets a 15% Chinese ownership threshold for automakers, yet Mercedes-Benz currently carries nearly 20% Chinese investment through its two largest individual shareholders, state-owned automaker BAIC and Geely founder Li Shufu, who collectively own nearly 20% of its shares.

Committee Chairman Ted Cruz, R-Texas, warned during the markup that the bill’s ownership provision would cover Mercedes-Benz because two Chinese investors collectively control a stake above the threshold. BAIC, formerly the Beijing Automotive Industrial Corp., holds a 9.98% stake, while Li Shufu owns 9.69%. Cruz emphasized that lawmakers would never consider banning Mercedes-Benz and said the bill needs changes before it can become law.

The legislation, introduced by Sen. Bernie Moreno, R-Ohio, and Sen. Elissa Slotkin, D-Mich., would permanently bar the importation, manufacture, sale, and resale of connected vehicles, software, and hardware tied to China, Russia, Iran, or North Korea. The bill codifies federal restrictions intended to keep Chinese-linked vehicle technology out of the U.S. market over national security concerns. Connected cars equipped with sensors, cameras, and data transmission capabilities represent potential national security vulnerabilities. Supporters warn that these vehicles could collect sensitive data and transmit it to foreign adversaries.

National Security Concerns Drive Legislative Push

“We’re preventing an absolute, total, and complete destruction of our industrial base,” said Sen. Bernie Moreno, who introduced the bill with Sen. Elissa Slotkin.

The bill targets connected vehicles specifically because of their potential to gather intelligence through integrated technology systems. Modern automobiles increasingly function as rolling computers, collecting vast amounts of data about driver behavior, locations, and even conversations within the vehicle. Lawmakers from both parties express concern that vehicles manufactured or controlled by Chinese entities could serve as surveillance tools, enabling foreign governments to monitor American citizens and critical infrastructure.

The Senate Commerce Committee voted unanimously on July 22 to advance the Connected Vehicle Security Act to the full Senate floor for consideration. However, deliberations during the hearing revealed significant divisions that cloud the bill’s chances of becoming law in its current form. The legislation still requires a Senate floor vote and must pass through three House committees before potentially reaching the president’s desk.

Mercedes-Benz Faces Compliance Deadline and Waiver Options

Moreno clarified during the markup that Mercedes-Benz would have until 2030 to comply with the ownership limit and could seek a waiver from the Commerce Department if needed. The German automaker had already been working to head off an unfavorable outcome by lobbying to raise the bill’s Chinese ownership cap from 15% to 25%, a change that would place the company under the threshold. Mercedes-Benz declined to comment on the legislation but noted that it employs more than 10,000 people in the United States and operates assembly plants in Alabama and South Carolina.

The compliance timeline represents a crucial element of the debate, as it would give affected automakers several years to restructure their ownership or divest Chinese investors. However, critics question whether such restructuring is practically feasible for companies with billions of dollars in market capitalization and complex international ownership structures. The waiver provision also introduces uncertainty, as it remains unclear what criteria the Commerce Department would use to evaluate waiver applications.

Cruz Accuses GM of Competitive Manipulation

During the markup, Cruz accused General Motors of supporting the ownership provision in an effort to weaken Mercedes-Benz and make Cadillac more competitive in the luxury vehicle segment. Cruz blasted the 15% threshold as a maneuver to benefit General Motors Co.’s Cadillac brand by imperiling a competitor. The Texas senator called the provision “a very direct shot” intended to damage Mercedes-Benz’s market position.

“GM is pushing for this provision to get Mercedes-Benz out of the market,” Cruz said.

GM, the top-selling automaker in the United States, did not immediately respond to requests for comment on Cruz’s allegations. The accusations highlight tensions within the automotive industry about whether national security legislation could be weaponized for competitive advantage. Cruz advocated for replacing the percentage-based threshold with more qualitative assessments of national security risks patterned on evaluations conducted by the Committee on Foreign Investment in the United States.

Industry Groups Voice Support for Chinese Vehicle Ban

Industry groups have begun weighing in on the bill’s passage through the Senate Commerce Committee. The American International Automobile Dealers Association (AIADA) released a statement supporting the legislation’s intent to block Chinese automakers from the American market. AIADA President and CEO Cody Lusk emphasized concerns about Chinese manufacturers entering the country with artificially low prices subsidized by their government and questionable labor practices.

“They seek to enter our country with artificially low prices, subsidized by their government and questionable labor practices, and decimate the American automotive industry. They are singularly focused on dominating our auto market and making Americans reliant on Chinese products and technology. Today’s committee vote is a positive first step in crafting legislation that counters those efforts and works for all Americans,” Lusk said.

The Owner-Operator Independent Drivers Association (OOIDA), representing nearly 150,000 small-business truckers, also backed the committee’s action. OOIDA President Todd Spencer tied the group’s support to concerns about autonomous trucking technology already operating on U.S. roads. The association worries that Chinese-linked autonomous vehicle systems could pose both national security risks and economic threats to American truck drivers.

Legislative Path Forward Remains Uncertain

The controversy reveals deep divisions within the committee about how to structure national security protections without creating unintended market distortions. Some lawmakers worry that the legislation could appear to favor domestic manufacturers over international competitors. The tension between national security objectives and established business relationships will likely shape negotiations. These competing interests will influence discussions as the Connected Vehicle Security Act of 2026 continues its journey through Congress.

The bill’s future depends on whether sponsors can craft compromise language that addresses legitimate security concerns while avoiding collateral damage to established automakers with significant American manufacturing footprints. Mercedes-Benz’s extensive U.S. operations, including two major assembly plants and thousands of American jobs, complicate the straightforward application of ownership thresholds. The debate underscores broader questions about how the United States balances economic openness with security imperatives in an era of heightened geopolitical competition with China.