Could the U.S. Really Ban Mercedes-Benz Over Chinese Ownership?
A bipartisan bill advancing through the U.S. Congress has placed one of the world’s most recognizable luxury automakers in an unexpected spotlight. Mercedes-Benz, the German brand long associated with premium engineering and a significant American manufacturing footprint, could face restrictions on selling vehicles in the United States if legislation targeting Chinese-linked carmakers becomes law in its current form. The issue centers not on the quality or origin of Mercedes vehicles themselves, but on the company’s ownership structure and a hard numerical threshold designed to limit foreign adversary influence in the U.S. auto industry.
The Connected Vehicle Security Act, introduced by Senators Bernie Moreno (R-Ohio) and Elissa Slotkin (D-Michigan), advanced unanimously out of the Senate Commerce, Science, and Transportation Committee in late July 2026. The measure aims to strengthen existing restrictions on Chinese involvement in the American automotive market. It would prohibit the sale of “connected vehicles”—modern cars that rely on software, sensors, wireless communications, and data systems—by any automaker more than 15 percent owned by entities from countries designated as foreign adversaries, including China, Russia, Iran, and North Korea. The bill also seeks to limit certain Chinese-sourced technologies and battery systems, reflecting broader national security concerns about data access, supply chain vulnerabilities, and the rapid expansion of China’s auto industry.
Mercedes-Benz currently exceeds that ownership threshold. Two Chinese stakeholders together hold nearly 20 percent of the company’s shares. Beijing Automotive Group (BAIC), a state-owned Chinese automaker, owns approximately 9.98 percent, making it one of Mercedes’ largest individual shareholders. Separately, Li Shufu, the billionaire founder and chairman of Zhejiang Geely Holding Group, controls about 9.69 percent through an investment vehicle. Combined, these passive stakes push Mercedes over the proposed 15 percent limit. Neither shareholder holds a seat on the supervisory board or exercises operational control, according to the company. Decisions remain with Mercedes’ Board of Management. Still, the bill’s language as written does not distinguish between controlling and non-controlling stakes, creating the potential for the German brand to be swept up alongside purely Chinese manufacturers.
This development is particularly striking given Mercedes-Benz’s deep ties to the United States. The company operates major assembly plants in Alabama and South Carolina, producing SUVs, vans, and other models for the American and export markets. It employs roughly 10,000 people directly in the U.S. and, by its own accounting, supports a much larger ecosystem of roughly 160,000 jobs across suppliers, dealers, and related businesses. Mercedes has invested billions in its U.S. operations over the years and continues to expand production capacity. An abrupt restriction on sales would disrupt not only the brand but also American workers, dealers, and supply chains that have grown around its presence.
Mercedes has responded by lobbying lawmakers to modify the bill. Reports indicate the company has pushed to raise the Chinese ownership cap from 15 percent to 25 percent, a level that would provide breathing room under its current structure. It has also advocated for a more qualitative national-security review process rather than a rigid percentage threshold. In public statements, Mercedes has emphasized its diversified shareholder base and lack of foreign control. “No shareholder holds more than 10 percent of our stock, and our major shareholders are not directly represented on the Supervisory Board or have any control or decision-making authority,” the company has noted. It has also stressed its support for legislation that protects U.S. national security while urging that any final rules not damage existing American manufacturing operations.
Key senators involved in the legislation have signaled that an outright ban on Mercedes is not the intended outcome. Senate Commerce Committee Chairman Ted Cruz (R-Texas) acknowledged during committee deliberations that the current text would cover Mercedes because of the combined Chinese stakes. He insisted, however, that Congress “would never consider” banning Mercedes-Benz sales in the United States and that the bill requires changes before it can become law. Cruz also alleged that General Motors has advocated for the strict 15 percent threshold in part to reduce competition for its Cadillac brand. GM has denied targeting any specific rival, stating that it supports policies strengthening American manufacturing and ensuring a level playing field for U.S. automakers.
Senator Bernie Moreno, a co-sponsor and former Mercedes dealer whose family still has ties to the brand, offered a more practical timeline. He said Mercedes would have until 2030 to come into compliance if the bill becomes law and could seek waivers from the Commerce Department. Moreno framed the legislation as a necessary step to prevent the “absolute, total, and complete destruction” of the U.S. industrial base by Chinese competition, rather than a measure aimed at established European manufacturers with long-standing American operations.
The bill’s path forward remains uncertain. After clearing the Senate committee, it still requires a full Senate vote, reconciliation with any companion House legislation, and presidential approval. Earlier House efforts, including provisions in the Motor Vehicle Modernization Act of 2026, had raised similar concerns about foreign-adversary equity stakes. Political divisions over the precise language, combined with intensive lobbying by affected companies, suggest further amendments are likely. Mercedes is not the only brand that could be affected. Volvo and Lotus, both under significant Geely influence, face related risks. Polestar, another Geely-linked brand, has already encountered separate restrictions on U.S. sales beginning in 2027 under existing Commerce Department rules focused on connected vehicle technology.
The controversy highlights the intensifying U.S.-China rivalry in the automotive sector. American policymakers have grown increasingly wary of Chinese electric vehicles, batteries, software, and investment as Beijing’s domestic industry has scaled rapidly with government support. Measures already in place effectively block most Chinese passenger vehicles from the U.S. market. The new legislation seeks to close potential loopholes involving ownership stakes and technology supply chains. At the same time, it risks unintended consequences for companies whose Chinese shareholders are passive investors rather than controlling entities. The distinction between financial investment and operational influence has become a central point of debate.
For Mercedes-Benz, the immediate priority is shaping the final text of the bill. The company continues normal U.S. operations, including production and sales of its full lineup, while monitoring developments in Washington. An outright ban remains improbable given the explicit statements from key senators, the brand’s manufacturing presence, and the political costs of disrupting a major employer. Yet the episode underscores how ownership structures that once seemed routine can become liabilities in an era of heightened geopolitical tension.
As the Connected Vehicle Security Act moves toward the full Senate, lawmakers will need to balance legitimate national-security concerns against the practical realities of a globalized auto industry. Raising the ownership threshold, introducing clearer definitions of control, or creating structured waiver processes could resolve the Mercedes issue without weakening the bill’s core objectives. Until those adjustments are made, the German automaker finds itself in the unusual position of arguing that it does not belong in the same category as the Chinese competitors the legislation was primarily designed to address. The outcome will offer an early test of how precisely Congress can target foreign influence without collateral damage to long-established industrial relationships.
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