Senate auto bill raises Mercedes concern over Chinese ownership

A Senate committee moved forward with a China-focused auto bill that could create an unexpected problem for Mercedes-Benz, a major global automaker with U.S. factories. For retail investors, the issue is less about one brand’s showroom presence today and more about how Washington’s national security rules can reshape competition in the car market.

The Senate Commerce Committee on Wednesday advanced the bipartisan Motor Vehicle Modernization Act of 2026, legislation aimed at keeping Chinese-linked automakers and vehicle technology out of the U.S. market. The bill would put federal restrictions into law because of concerns that connected vehicles, cars with internet-linked software and sensors, could collect sensitive data.

Sen. Ted Cruz, the Texas Republican who chairs the committee, said during the committee session that the bill’s current language could sweep in Mercedes-Benz. Cruz said the proposal sets a 15% threshold for Chinese ownership, and Mercedes-Benz has two Chinese investors that together own close to 20% of the company.

Mercedes-Benz lists Chinese state-owned automaker BAIC, formerly Beijing Automotive Industrial Corp., as holding 9.98% of its shares. The company also lists Geely founder Li Shufu with a 9.69% stake. They are Mercedes-Benz’s two largest individual shareholders, according to the company’s shareholder information.

Cruz said lawmakers would not intend to ban Mercedes-Benz and said the legislation would need revisions before it could become law. That matters because a committee vote is only one step in Congress. A bill still must clear additional legislative hurdles before it can take effect.

How the ownership test would work

The bill’s 15% threshold is meant to identify companies with enough Chinese ownership to raise concerns under the proposed rules. If a company crosses that line, it could face limits tied to selling vehicles or vehicle technology in the United States.

Sen. Bernie Moreno, the Ohio Republican who introduced the bill with Sen. Elissa Slotkin, a Michigan Democrat, framed the legislation as a defense of the U.S. auto sector. Moreno said the measure was intended to prevent what he called the “destruction” of the country’s industrial base.

Moreno also said Mercedes-Benz would have until 2030 to meet the ownership limit under the bill and could apply for a waiver. A waiver is an exemption from a rule, usually granted by regulators or another government authority under specific conditions.

Mercedes-Benz previously declined to comment on the legislation, but the company has said it employs more than 10,000 people in the United States and runs assembly plants in Alabama and South Carolina.

GM enters the debate

Cruz also accused General Motors of backing the ownership provision because it could hurt Mercedes-Benz and make Cadillac more competitive. Cruz said GM was pushing the provision to remove Mercedes-Benz from the market.

GM and Mercedes-Benz did not immediately respond to requests for comment, according to CNBC. GM is the top-selling automaker in the United States.

The bill now sits at the intersection of auto policy, national security and competition. For investors watching automakers, the key takeaway is that ownership structure and political risk can matter alongside sales, margins and product lineups.

This story draws on original reporting from CNBC.