Mercedes-Benz faces potential US ban under bill targeting Chinese automaker’s ownership

Mercedes-Benz faces a potential ban on sales of connected vehicles in the US under legislation targeting automakers with significant ownership ties to China.

The Senate Commerce Committee last week advanced a measure that would ban the sale of connected vehicles in the U.S. to companies with more than 15 percent ownership by Chinese entities, potentially affecting German automaker Mercedes-Benz, in which two Chinese investors own nearly 20 percent.

Senators Elissa Slotkin, Michigan, and Bernie Moreno, Ohio, supported bipartisan legislation that would codify and expand restrictions put in place under the Biden administration, arguing that it “closes the door to Chinese-sourced cars, software and key components at every stage, from production, import and sale, so that data collected on US roads cannot be sent back to the Chinese government.”

“The Chinese cars are surveillance packages on wheels, with the ability to collect data on American citizens and transmit that data back to Beijing,” Slotkin said in a statement..

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Mercedes-Benz faces a potential ban on the sale of connected vehicles in the US under legislation targeting automakers with significant ties to China. (Eric Thayer/Bloomberg via Getty Images/Getty Images)

Moreno said the measure was aimed at preventing the “absolute, complete and utter destruction of our industrial base.”

“China’s auto industry was not built to compete, it was built to destroy American manufacturing, erode the middle class and undermine our national security,” he said.

But Sen. Ted Cruz, R-Texas, who chairs the Commerce Committee, warned that Mercedes-Benz could effectively be shut out of the U.S. market if legislation becomes law without change and said the bill needed changes.

Cruz accused General Motors of pushing for measures to drive Mercedes-Benz out of the market and boost the appeal of the Cadillac brand.

“We would never consider” banning Mercedes-Benz sales in the U.S., he said.

GM argued that the legislation does not target any individual automaker, saying it “supports policies that protect and strengthen American manufacturing and the global competitiveness of U.S. automakers.”

The Senate Commerce Committee last week advanced a measure that would ban the sale of cars in the US to companies with more than 15% ownership by Chinese entities. (ANDREW CABALLERO-REYNOLDS/AFP via Getty Images/Getty Images)

“As we’ve said many times, we can compete with anyone in the world if we have a level playing field,” GM said.

Mercedes-Benz emphasized its extensive operations in the US, while stressing that it “continues to support legislation designed to protect US national security”.

“Mercedes-Benz also remains committed to ensuring that any legislation does not affect our operations. The company will continue to protect its employees, dealers, suppliers and customers,” the automaker said.

The bill provides a process by which manufacturers can request approval from the Department of Commerce for vehicles that would otherwise be prohibited.

Moreno said GM intends to move production of the Chinese-made Buick Envision to the U.S. for the 2028 model year and that Ford has agreed to move Chinese-made Lincolns to the U.S.

“I see it as a big win,” Moreno said.

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Senator Ted Cruz has warned that Mercedes-Benz will be removed from the US market if the legislation becomes law. (Arthur Vidak/NurPhoto via Getty Images/Getty Images)

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He also said that Google’s self-driving car company, Waymo, which has been in talks with Chinese automaker ⁠Geely about platforms coming from China, has committed to seeking Detroit-based manufacturers for its future platforms.

Cruz said another provision of the bill, backed by GM, would require automakers to buy more expensive batteries from GM, adding $5,000 to the cost of the cars.

It happens after The Trump administration last month banned Polestar from selling new plug-in cars in the US starting with the 2027 model year because the Swedish automaker is owned by Geely.

Polestar subsidiary and Volvo Cars co-founder said in May it had received the green light to continue selling cars in the US

Before the bill becomes law, the bill must still be passed by the full Senate and House of Representatives and signed by the president.

Reuters contributed to this report.