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Chinese ownership threshold threatens Mercedes sales path
Senators clash over 15% threshold for connected vehicle manufacturers as panel advances bill
The production line for the C-Class sedan in a new extension to the Mercedes-Benz plant in Kecskemet, Hungary, on July 13. (Akos Stiller/Bloomberg)
Key Takeaways:
- The Senate Commerce Committee unanimously advanced the Connected Vehicle Security Act on July 22, sending a proposal restricting certain Chinese-owned connected-vehicle automakers to the full Senate.
- Mercedes exceeds the proposed 15% threshold because BAIC Motor and Geely founder Li Shu Fu each hold nearly 10%.
- Cruz said the bill cannot become law with the threshold intact, while Moreno said Mercedes could comply by 2030 or seek a Commerce Department waiver.
A Senate panel advanced legislation that could eventually ban the sale of Mercedes-Benz Group AG vehicles in the U.S. over the German automaker’s partial Chinese ownership, setting up a potential clash as the proposal moves through Congress.
Members of the Senate Committee on Commerce, Science and Transportation voted unanimously July 22 to send the Connected Vehicle Security Act to the full Senate floor for consideration. But the deliberations in the hearing revealed divisions that cloud the bill’s chances of becoming law as-is.
The bill would prohibit the sale of connected vehicles by automakers that are more than 15% owned by Chinese entities. Mercedes, which has lobbied for changes to the bill, is nearly 10% owned by China’s BAIC Motor Corp., a state-owned carmaker.
Li Shu Fu, the billionaire founder and chairman of Chinese carmaker Geely, also holds nearly 10% of Mercedes’ shares, putting the company above the bill’s 15% threshold.
A Mercedes representative didn’t immediately respond to a request for comment.
The ownership provision was a major sticking point as the panel considered the legislation July 22. Sen. Ted Cruz (R-Texas), who chairs the Senate Commerce Committee, criticized the 15% rule, and called for it to be replaced with more qualitative assessments of national security risks patterned on evaluations conducted by the Committee on Foreign Investment in the U.S.
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Cruz blasted the 15% threshold as a maneuver to benefit General Motors Co.’s Cadillac brand by imperiling a competitor. He also called the provision “a very direct shot to inflict pain” on Mercedes by the United Auto Workers after factory workers in Alabama voted against joining the union in 2024.
“I want this bill to pass,” Cruz said. However, “this bill will not become law,” he said, if the 15% Chinese ownership threshold remains in the legislation.
Sen. Bernie Moreno (R-Ohio), who co-sponsored the bill, disputed that the measure’s intent is to single out the German carmaker.
Moreno said Mercedes would have until 2030 to comply with the bill, should it become law. He also said companies can seek a waiver from the Commerce Department if they don’t meet the measure’s requirements.
“What we’ll certainly never do, nor would anybody intend to do, is ban the sale of Mercedes-Benz automobiles in America,” said Moreno, a former Mercedes dealer whose son still operates a Mercedes franchise.
Bloomberg has reported that Mercedes has pushed for changes in the bill, including raising the threshold for permitted Chinese ownership to 25%.
