On the Dash:
- Proposed legislation could bar Mercedes-Benz from importing, selling, or manufacturing vehicles in the U.S. for five years.
- Dealers should monitor the bill’s ownership thresholds, which could affect multiple automakers with Chinese investment ties.
- Industry groups support efforts to limit Chinese influence but warn lawmakers that poorly defined ownership provisions could create unintended consequences.
New bipartisan legislation in Congress could prevent Mercedes-Benz from manufacturing, importing, or selling vehicles in the United States because of Chinese ownership stakes in its parent company. Industry experts and those familiar with the legislation suggest that the bill’s current wording might inadvertently include the German luxury automaker, despite its substantial U.S. manufacturing presence.
The Motor Vehicle Modernization Act of 2026 would ban automakers with direct or indirect equity interests held by foreign-adversary governments from operating in the U.S. market. Under this bill, China, Russia, and North Korea are classified as foreign adversaries.
Ownership structure raises concerns
Companies found in violation of this regulation could face a five-year ban on manufacturing, importing, or selling vehicles in the United States. Chinese state-owned automaker BAIC holds a 9.98% stake in Mercedes-Benz Group AG, making it the company’s largest individual shareholder. Additionally, Chinese billionaire Li Shufu, founder of Geely, holds a 9.69% stake through Tenaciou3 Prospect Investment. Together, these two shareholders control 19.67% of Mercedes-Benz Group AG.
Sources familiar with the legislation indicate that this ownership structure might trigger restrictions, depending on how lawmakers interpret the bill.
Impact on U.S. operations
Mercedes-Benz operates major manufacturing facilities in Tuscaloosa, Alabama, and South Carolina. Since opening in 1997, the Alabama plant has produced over 5 million vehicles and employs more than 10,000 people in the United States. Analysts warn that applying the legislation to Mercedes-Benz could jeopardize jobs, production, and investments associated with these operations.
Congress is actively pursuing measures to prevent Chinese automakers and entities linked to the Chinese government from gaining influence in the U.S. automotive market. While the bill includes exemptions for long-standing U.S. manufacturers, these exemptions do not apply to companies with direct or indirect ownership ties to foreign-adversary governments.
Policymakers have increasingly scrutinized Chinese ownership stakes in strategic industries, including automotive manufacturing and technology. Similarly, the Connected Vehicle Security Act of 2026 includes a separate 15% ownership threshold related to foreign-adversary influence. Depending on final exemptions and implementation, other automakers with Chinese ownership ties may also face scrutiny. Affected companies could include Volvo, Lotus, Faraday Future, and Karma Automotive.
Industry groups urge caution
The Alliance for Automotive Innovation has praised lawmakers for addressing concerns regarding China’s growing influence in the global auto industry. Industry leaders stress that lawmakers must clearly define ownership and control provisions to prevent unintended consequences. While foreign automaker groups support the legislation’s national security objectives, they continue to advocate for protections that safeguard U.S. manufacturing investments.
This proposed legislation follows previous federal restrictions on connected vehicle software and hardware linked to China. Starting with the 2027 model year, certain connected vehicle software from China will face restrictions, with hardware restrictions set to follow in 2030. Regulators are expanding oversight of Chinese involvement in automotive technology and manufacturing.
Currently, the bill remains a House initiative with no Senate companion measure, leaving significant uncertainty regarding its final language and future implementation.
