China Auto Bill Clears Senate Panel, Mercedes-Benz at Risk
The Senate Commerce Committee voted unanimously on Wednesday to advance legislation that would toughen restrictions on Chinese-linked vehicles and technology, a move that could unintentionally push Mercedes-Benz out of the U.S. market entirely.
The bill, known as the Connected Vehicle Security Act of 2026, was introduced by Sen. Bernie Moreno, R-Ohio, and Sen. Elissa Slotkin, D-Mich. It aims to give permanent legal footing to rules first finalized under President Biden in early 2025 that blocked Chinese automakers and connected vehicle technology from entering the U.S. passenger vehicle market over national security concerns, including fears that internet-connected cars could collect and transmit sensitive data back to Beijing.
The complication for Mercedes-Benz comes down to ownership math. The bill sets a threshold barring companies with more than 15% Chinese ownership from selling vehicles in the United States. Committee Chairman Ted Cruz, R-Texas, pointed out during the markup that Mercedes-Benz's two largest individual shareholders happen to be Chinese, and together they hold close to 20% of the company, well above the proposed cap.
Chinese state-owned automaker BAIC, formerly known as Beijing Automotive Industrial Corp., holds a 9.98% stake, making it Mercedes-Benz's single largest individual shareholder. Geely founder Li Shufu controls another 9.69% through an investment vehicle. Combined, that puts Chinese ownership at roughly 19.67%.
Moreno said Mercedes-Benz would have until 2030 to bring its ownership structure into compliance, or it could apply for a waiver from the requirement. "We're preventing an absolute, total, and complete destruction of our industrial base," he said during the hearing.
Cruz also used the moment to take a swipe at General Motors, alleging the Detroit automaker supports keeping the ownership cap unchanged because it would sideline Mercedes-Benz as a competitor and give Cadillac more room in the luxury segment. Moreno pushed back on that framing, noting that GM plans to shift production of the China-built Buick Envision to the U.S. by the 2028 model year.
Mercedes-Benz has not commented directly on the legislation but has reportedly lobbied to have the ownership threshold raised. The company has repeatedly pointed to its U.S. footprint in past statements, noting it employs more than 11,000 people domestically and operates an assembly plant in Tuscaloosa, Alabama, that has produced more than 4.5 million vehicles since it opened in 1997.
The bill has already drawn support from GM, the United Auto Workers, and the CAR Coalition. UAW President Shawn Fain said the legislation "puts common sense guardrails on a major threat to our nation's auto industry."
The measure would also cover vehicles and technology linked to Russia, Iran, and North Korea, and would give the Commerce Department more authority to identify and block high-risk automotive technologies, including software tied to connectivity and battery management systems.
The vote follows recent enforcement action under the existing Connected Vehicle Rule. Polestar, majority-owned by China's Geely Holding, was forced to stop selling new vehicles in the U.S. after the Commerce Department denied its authorization request. Volvo Cars, a sister brand also under Geely, had been granted authorization roughly a month earlier.
The bill still has a long road ahead. It needs a full vote on the Senate floor, while a companion bill in the House, introduced by Reps. John Moolenaar and Debbie Dingell must clear three separate committees, Energy and Commerce, Ways and Means, and Foreign Affairs, before reaching the House floor. Any differences between the two chambers' versions would then need to be reconciled before a final bill lands on the president's desk.
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