WASHINGTON — Mercedes-Benz manufactures nothing in China for the American market. Its vehicles for US buyers roll off assembly lines in Stuttgart, in Tuscaloosa, Alabama, and in Kecskemét, Hungary. The Senate Commerce Committee voted unanimously on Wednesday to advance legislation that could remove every Mercedes from American showrooms by 2027 regardless, because the Chinese government and Chinese investors together hold nearly a fifth of the company’s shares.
The Connected Vehicle Security Act of 2026, sponsored by Senator Elissa Slotkin of Michigan and Senator Bernie Moreno of Ohio, cleared the committee without a single dissenting vote. The legislation would prohibit the importation, manufacture, and sale of connected vehicles, software, and hardware linked to China or other designated foreign adversaries, converting a January 2025 Department of Commerce regulation into permanent federal statute and closing the door against a future administration that might choose to reverse it.
The bill’s stated targets are Chinese automakers: BYD, Geely, Changan, and an industry that has reshaped global EV competition in four years without ever entering the American retail market. But the legislation also contains an ownership threshold. Any company with more than 15 percent of its equity held by Chinese entities would be designated a covered foreign adversary, triggering the same import and sales prohibition. That clause has now caught Mercedes-Benz.
BAIC Group, formally the Beijing Automotive Industrial Corporation and majority-owned by the municipal government of Beijing, holds 9.98 percent of Mercedes-Benz Group AG on the Frankfurt exchange. Additional Chinese sovereign funds and institutional investors push the combined Chinese ownership stake to approximately 20 percent. The bill’s 15 percent threshold, if enacted without amendment, would sweep a company headquartered in Stuttgart and building American-market vehicles in Alabama into the same prohibited category as a BYD sedan assembled in Shenzhen.
Mercedes-Benz has been lobbying the Senate Commerce Committee to raise the ownership cap from 15 to 25 percent, according to people familiar with the discussions. A threshold at 25 percent would exclude Mercedes while still capturing companies in which a Chinese state entity holds a controlling or near-controlling position. The lobbying effort reflects the scale of what is at stake: Mercedes sold nearly 280,000 vehicles in the United States last year, a market the company cannot replace at equivalent margins anywhere else.
For the bill’s sponsors, those complications are secondary. Slotkin, a Democrat whose state depends on auto manufacturing, said Chinese vehicles are “surveillance packages on wheels, with the ability to collect on American citizens and transmit that data back to Beijing,” Slotkin’s office announced Wednesday. Moreno, a Republican from Ohio, has said China’s auto industry was built to destroy American manufacturing and cut the middle class from the industrial economy. The legislation draws national security arguments from the right and trade protection reasoning from the left, in a chamber where unified votes are increasingly rare.
General Motors, Ford, Stellantis, Honda, and the United Auto Workers union have each formally endorsed the legislation. For Detroit’s legacy manufacturers, the bill would codify protection from a competitive threat that has not yet arrived but is structurally inevitable. GM’s North American profit margin hit a 43 percent quarterly gain this month, driven by combustion trucks and SUVs that face no Chinese competition in the current market. The legislation, if enacted, would extend that advantage into the connected-vehicle era before Chinese manufacturers can build US distribution infrastructure.
The Senate Commerce vote is the latest in a sequence of moves designating Chinese technology sectors as national security risks. The Federal Communications Commission on Tuesday proposed rules to bar DJI and Autel Robotics drones from US military supply chains, citing data collection concerns structurally similar to those in the vehicle legislation. The logic that a connected device collecting information on American soil poses an intelligence risk if its manufacturer has any exposure to Chinese state direction has migrated from telecommunications equipment into drones and now into the automotive sector.
The new bill builds on existing regulatory architecture. Commerce Department rules finalized in January 2025 restrict imports of connected vehicle systems and software from Chinese and Russian manufacturers, but those rules can be modified or reversed by a future administration. The Connected Vehicle Security Act would convert them into statute, making the prohibitions permanent regardless of executive branch changes, as Senator Moreno’s office confirmed. A software and connectivity ban would take effect in 2027; hardware restrictions would follow in 2030.
The bill now advances to the full Senate for a floor vote. It also requires approval from three House committees before reaching the president’s desk. The Senate Commerce Committee’s unanimous result signals bipartisan momentum, but the amendment process, where Mercedes-Benz and potentially other European manufacturers with Chinese investors will press their case on the 15 percent threshold, has not yet begun.
The broader calculation running beneath this and similar legislation is whether the cost of technological separation from China is manageable. Research by EY-Parthenon puts the price of genuine Western decoupling across all supply chains at $23.6 trillion, a figure that explains why most policy has retreated from full separation to targeted restriction. The Connected Vehicle Security Act sits in that middle ground: sweeping in its stated purpose, still uncertain in its geographic reach, and already being reshaped by the companies it did not set out to target.
Whether Mercedes-Benz emerges from the legislative process with a higher ownership threshold or finds that the bill’s sponsors view 20 percent Chinese shareholding as disqualifying regardless of where the cars are assembled is a question the Senate floor has not yet answered. What Wednesday’s unanimous committee vote made clear is that the connected vehicle has joined semiconductors, telecommunications equipment, and military drones on Washington’s list of technologies no longer considered separable from the geopolitical contest with Beijing.
