Senate panel advances China auto bill with potential Mercedes impact

The Senate Commerce Committee advanced bipartisan legislation on Wednesday that would strengthen restrictions on Chinese-linked automakers and vehicle technology in the U.S. market. The measure drew an immediate warning from committee Chairman Ted Cruz, R-Texas, who said its 15% Chinese ownership threshold could reach Mercedes-Benz because two Chinese investors together hold nearly one-fifth of the German automaker.

The bill, called the Motor Vehicle Modernization Act of 2026, is intended to put federal limits on Chinese-connected vehicle systems into law. Supporters cite national security risks from connected cars, including the potential for vehicles and onboard technology to gather sensitive data.

Cruz said during the committee markup that Mercedes-Benz could fall inside the bill’s scope under the proposed ownership test. According to Mercedes-Benz’s shareholder information, its two largest individual shareholders are BAIC, the Chinese state-owned automaker formerly known as Beijing Automotive Industrial Corp., with a 9.98% stake, and Geely founder Li Shufu, with 9.69%.

Cruz said lawmakers would not consider banning Mercedes-Benz and added that the legislation would need revisions before it became law. The committee’s vote moves the bill forward, though the measure would still need to clear further legislative steps before any restrictions could take effect.

How the ownership test works

The bill’s structure would use Chinese ownership as one trigger for restrictions on automakers or vehicle technology providers. A 15% threshold means a company with Chinese-linked investors above that level could be treated as covered by the ban, depending on the final statutory language and any implementing rules.

Sen. Bernie Moreno, R-Ohio, who introduced the bill with Sen. Elissa Slotkin, D-Mich., defended the measure during the markup as a protection for the U.S. industrial base. “We’re preventing an absolute, total, and complete destruction of our industrial base,” Moreno said.

Moreno said Mercedes-Benz would have until 2030 to meet the ownership limit if the legislation became law. He also said the company could seek a waiver, a mechanism that would allow regulators to exempt a covered company or activity under conditions set by the law or by implementing agencies.

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

Cruz criticizes GM’s role

During the markup, Cruz also accused General Motors of backing the provision to put pressure on Mercedes-Benz and improve Cadillac’s competitive position. “GM is pushing for this provision to get Mercedes-Benz out of the market,” Cruz said.

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

The debate places national security policy, ownership rules and industrial competition in direct contact. Lawmakers are seeking to restrict Chinese influence in connected vehicle systems, while the Mercedes-Benz example shows how broad ownership tests can affect global manufacturers with dispersed shareholder bases and established U.S. operations.

This story draws on original reporting from CNBC.