A U.S. Senate committee has advanced legislation that could prevent automakers with significant ownership from Chinese entities from selling connected vehicles in the United States. While the proposal primarily targets national security concerns, its current wording could also affect global brands such as Mercedes-Benz.
Senate Measure Expands Focus Beyond Vehicle Production
A bipartisan proposal has moved one step closer to becoming law after receiving approval from the U.S. Senate Commerce Committee.
Unlike existing restrictions that emphasize where a vehicle is built or whether it contains software linked to China, the new legislation introduces an additional standard: corporate ownership. Under the current draft, an automaker with more than 15% ownership by entities from designated countries could face restrictions on importing or selling connected vehicles in the U.S.
The proposal is part of a broader effort by lawmakers to strengthen oversight of vehicles that collect, process, or transmit digital information. Supporters argue that ownership structure should receive the same level of scrutiny as manufacturing location or onboard technology.
Mercedes-Benz Could Be Caught by the Current Language
One of the most notable consequences of the bill is its potential impact on Mercedes-Benz, despite the company being headquartered in Germany.
Chinese automaker BAIC owns nearly 10% of Mercedes-Benz's parent company, while Li Shufu, founder of Geely, also holds a stake approaching 10%. Combined, Chinese investors control close to 20% of the automaker, placing Mercedes above the ownership threshold outlined in the proposed legislation.
Because the bill evaluates ownership rather than production origin, even vehicles manufactured outside China could become subject to restrictions if the ownership requirements are not met.
This approach represents a significant shift in regulatory thinking and could broaden the range of manufacturers affected by future U.S. trade and security policies.
Lawmakers Acknowledge the Proposal May Need Revision
Although the committee approved the legislation, several lawmakers have already indicated that changes may be necessary before it reaches the president's desk.
Senator Ted Cruz, who chairs the committee, stated that the bill's current wording could technically prevent Mercedes-Benz from selling vehicles in the United States. At the same time, he suggested that Congress has no intention of excluding the German luxury brand from the American market and expects revisions before final passage.
The discussion highlights the complexity of writing ownership-based regulations in an increasingly global automotive industry, where many manufacturers have multinational shareholders despite operating independently.
Automakers Respond as Debate Continues
The proposal has also drawn attention from major automakers that could be affected either directly or indirectly.
According to public statements, General Motors supports policies designed to strengthen U.S. manufacturing competitiveness and protect national interests. Meanwhile, Mercedes-Benz has said it supports legislation intended to enhance national security while emphasizing that any new rules should avoid disrupting its business operations.
As negotiations continue, the final version of the bill may look different from the committee-approved draft. However, the proposal signals that Washington is expanding its review of connected vehicles beyond hardware and software to include corporate ownership structures as well.
National Security Remains the Primary Focus
The proposed legislation is part of a broader U.S. effort to reduce potential security risks associated with connected vehicles.
Lawmakers argue that modern vehicles generate and transmit large amounts of data through internet-connected systems, including location information, sensor data, and software updates. If companies with ties to designated foreign governments influence these technologies, officials believe sensitive information could potentially be exposed outside the United States.
For that reason, the bill would formally incorporate restrictions designed to prevent connected vehicle technologies linked to China, Russia, Iran, and North Korea from entering the U.S. market.
The Proposal Builds on Existing Restrictions
If enacted, the Connected Vehicle Security Act would expand regulations that already limit certain Chinese-linked vehicle technologies in the United States.
Beginning in 2027, the legislation would prohibit the import or sale of connected vehicles that are manufactured, designed, or significantly owned by entities from countries covered under the bill. The proposal would then broaden its scope in 2030, extending restrictions beyond software to include key hardware components used in connected vehicle systems.
The phased timeline is intended to give manufacturers additional time to restructure supply chains, adjust ownership arrangements where necessary, or request exemptions before the stricter requirements take effect.
Ohio Senator Bernie Moreno, one of the bill's original sponsors, noted that companies affected by the ownership provisions would have until 2030 to comply with the new standards or pursue a waiver through the appropriate federal process.
Global Automakers May Face New Compliance Challenges
Although the legislation is largely aimed at reducing China's influence over connected vehicles, its ownership-based approach could create unexpected challenges for international automakers with diverse shareholder structures.
Unlike previous rules that focused primarily on manufacturing location or software origin, the proposed framework evaluates who owns the company itself. As a result, multinational automakers with substantial investments from covered entities may need to reassess corporate governance, ownership composition, or long-term business strategies to maintain access to the U.S. market.
Because the bill is still moving through Congress, its final language could change before becoming law. Nevertheless, the proposal signals a broader shift in U.S. policy, with regulators placing increasing emphasis on ownership transparency alongside technology and supply chain security.
FAQ
Why could Mercedes-Benz be affected by the proposed bill?
The current draft limits companies with more than 15% ownership by covered foreign entities. Chinese investors, including BAIC and Geely founder Li Shufu, collectively own nearly 20% of Mercedes-Benz, placing the company above the proposed threshold.
What is the Connected Vehicle Security Act?
It is proposed U.S. legislation that would restrict the import and sale of connected vehicles associated with designated foreign entities. The bill expands existing security rules by considering corporate ownership in addition to vehicle technology.
When would the proposed restrictions take effect?
Under the current proposal, restrictions on covered connected vehicles would begin in 2027. Additional requirements covering hardware components would be implemented in 2030.
Does the bill only target Chinese-built vehicles?
No. The proposal goes beyond manufacturing location. It also considers ownership structure, meaning companies headquartered outside China could still be affected if ownership by covered entities exceeds the specified threshold.
Has the legislation become law?
No. The bill has advanced through the U.S. Senate Commerce Committee, but it must still complete the remaining legislative process before it can become federal law. Amendments are also possible before final approval.
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