Senate bill with 15% threshold threatens Mercedes-Benz US sales

A bipartisan Senate bill targeting Chinese-owned automakers threatens to block Mercedes-Benz from the US market due to its nearly 20% Chinese ownership, triggering a clash between national security policy and global supply chains.

A bipartisan Senate bill advancing through Congress would bar Mercedes-Benz from selling connected vehicles in the US because Chinese entities hold nearly 20% of the German automaker, exceeding the proposed 15% ownership threshold that lawmakers designed to target Chinese-owned manufacturers.

"We're preventing an absolute, total, and complete destruction of our industrial base," Senator Bernie Moreno, the Ohio Republican who co-sponsored the bill alongside Michigan Democrat Elissa Slotkin, said during the Senate Commerce Committee markup last week.

The Motor Vehicle Modernization Act of 2026 would prohibit the sale of connected vehicles in the US by companies in which Chinese entities hold more than a 15% stake. Mercedes-Benz's largest Chinese shareholders include state-owned BAIC with 9.98% and Geely founder Li Shufu with 9.69%, according to Reuters. The bill also includes a waiver process through the Commerce Department and gives automakers until 2030 to comply.

If enacted, the legislation would force Mercedes-Benz to restructure its ownership or exit the US market, threatening operations that employ more than 10,000 Americans across manufacturing facilities in Alabama and South Carolina. The automaker said it "continues to support legislation designed to protect US national security" while working to ensure new rules do not affect its business.

The GM Factor

The bill has exposed tensions among US automakers. Senator Ted Cruz, the Texas Republican who chairs the Commerce Committee, accused General Motors of pushing the ownership provision to weaken competition from Mercedes-Benz and boost its Cadillac brand. "We would never consider" banning Mercedes-Benz, Cruz said, adding that the legislation needs changes before becoming law.

GM denied the accusation, saying the bill "supports policies that protect and strengthen American manufacturing and the global competitiveness of US automakers." The Detroit automaker plans to move production of its China-made Buick Envision to the US for the 2028 model year, while Ford has agreed to transfer Chinese-made Lincoln production domestically, according to Moreno.

Precedent and Path Forward

The bill follows the Trump administration's decision last month to ban Polestar from selling new connected vehicles in the US starting with the 2027 model year, because the Sweden-based automaker is majority-owned by China's Geely Holding. Polestar's sister brand Volvo Cars received authorization to continue US sales in May.

The current average US tariff on Chinese-made vehicles stands at 27.5%, according to the Office of the US Trade Representative, after the previous 25% Section 301 tariff escalation in 2018 reduced bilateral auto trade. The bill must still pass the full Senate and House and be signed by the president before becoming law, with lawmakers expected to debate potential changes to avoid unintended consequences for global automakers operating in the US.

This article is for informational purposes only and does not constitute investment advice.