Mercedes-Benz faces the prospect of being barred from selling cars in the United States under legislation heading for a vote in the Senate Commerce Committee on Wednesday.
The Connected Vehicle Security Act bars automakers from selling connected vehicles in the US if Chinese groups hold more than 15% of their shares.
Mercedes-Benz Group AG’s two largest individual shareholders are both Chinese: BAIC, the state-owned automaker, holds 9.98%, while Li Shufu, founder of Geely Holding Group, controls 9.69% through Tenaciou3 Prospect Investment.
Combined, the two stakes reach 19.67% — well above the bill’s threshold.
Mercedes has been lobbying the committee to weaken the legislation, pointing to its US footprint.
The German automaker supports 160,000 American jobs across factories, suppliers and dealers, according to the Financial Times.
The company said it backs legislation “designed to protect US national security,” however it “remains committed to ensuring that any legislation does not impact our operations.”
They argued that no single shareholder holds more than 10% of its stock, and therefore its major shareholders have no direct representation on the supervisory board or any control or decision-making authority.
Under the bill’s framework, however, the relevant figure is the combined Chinese stake — not the size of any individual holding.
Mercedes‘s lobbying effort has drawn criticism from both sides of the aisle.
Republican Bernie Moreno from Ohio, one of the Senators behind the bill — and a former Mercedes car dealer — has described the legislation’s goal as creating a “hermetic seal” around the US auto market to keep Chinese entrants out.
Democrat Elissa Slotkin of Michigan has called Chinese vehicles “surveillance packages on wheels.”
Polestar Precedent
European car industry executives have grown more anxious about the bill after the US recently barred Polestar, majority-owned by Geely, from selling new EVs in the country.
The Commerce Department declined to grant Polestar an authorization under separate US connected vehicle rules that restrict Chinese technology, a decision the brand’s CEO Michael Lohscheller called “pretty straightforward” and said he would not appeal.
Volvo Cars, also owned by Geely, received authorization to continue importing and selling connected vehicles after demonstrating to US authorities that data from its vehicles did not flow to China.
Volvo already produces vehicles at its plant in South Carolina, while Polestar had been in the process of shifting EV production from China to the US when the denial arrived.
The Swedish-headquartered automaker’s CEO Håkan Samuelsson told the FT the company was waiting to see the bill’s final details before taking a stance.
Samuelsson pointed to Volvo‘s roughly 10,000 US employees and questioned whether lawmakers would take a decision that puts those jobs at risk.
Moves to Cut Chinese Suppliers
Other manufacturers are already moving to comply with existing Commerce Department connected vehicle rules or to pre-empt the legislation.
General Motors has directed several thousand suppliers to find alternatives to Chinese inputs by 2027, anticipating the hardware restrictions.
GM is also moving production of its Buick Envision from China to its Fairfax Assembly plant in Kansas City, Kansas, starting in 2028.
The committee vote on Wednesday follows months of intensifying congressional pressure to block Chinese automakers from the US market.
Five major auto trade groups — representing General Motors, Ford, Toyota, Volkswagen and Hyundai — wrote to the White House late last year calling China a “clear and present threat.”
US Trade Representative Jamieson Greer said in April that the administration has no plans to ease the restrictions, adding that Chinese automakers would likely struggle to establish new production in the country under the current rules.
Mercedes-Benz‘s largest US manufacturing operation sits in Tuscaloosa, Alabama, where more than five million vehicles have been built since 1997.
The company has also produced more than 450,000 passenger vans at its plant in South Carolina.
