A bipartisan Senate bill aimed at blocking Chinese influence over connected vehicles sold in America has an unintended target, Mercedes-Benz, and even the committee chairman says the measure needs fixing.
The Senate Commerce Committee advanced legislation that would bar the sale of connected vehicles in the United States by any company with more than 15 percent ownership by Chinese entities. Two Chinese investors hold stakes in Mercedes-Benz totaling nearly 20 percent, which means the iconic German automaker could be effectively locked out of the American market if the bill becomes law without changes.
Sen. Ted Cruz, the Texas Republican who chairs the Commerce Committee, flagged the problem directly. "We would never consider" banning Mercedes-Benz sales in the U.S., Cruz said, warning that the bill as written could do exactly that. He accused General Motors of pushing the measure to cut Mercedes-Benz out of the market and make GM's Cadillac brand more appealing to luxury buyers.
Sen. Elissa Slotkin, a Michigan Democrat, and Sen. Bernie Moreno, an Ohio Republican, co-sponsored the legislation. Their case rests on a straightforward national security argument: modern connected vehicles, cars equipped with internet-linked software, sensors, and data-transmission systems, collect enormous amounts of information about drivers and their surroundings. If a Chinese-controlled company builds or sells those vehicles in the U.S., that data could flow back to Beijing.
Slotkin put it bluntly, as Fox Business reported:
"Chinese cars are surveillance packages on wheels, with the ability to collect on American citizens and transmit that data back to Beijing."
Moreno framed the threat in economic terms as well, arguing that China's auto industry "was not built to compete, it was built to destroy American manufacturing, gut the middle class and undermine our national security." He said the bill aims to prevent "an absolute, total, and complete destruction of our industrial base."
The sponsors said the legislation "closes the door on Chinese-origin vehicles, software, and key components at every stage, from production, importation, to sale, so that data gathered on U.S. roads can't be funneled back to the Chinese government." The bill would codify and expand restrictions first established under the Biden administration, and it includes a process through which manufacturers could seek authorization from the Commerce Department for vehicles that would otherwise be prohibited.
Cruz's objection goes beyond Mercedes-Benz. He alleged that a provision backed by GM would require automakers to purchase more expensive batteries from GM, adding roughly $5,000 to the cost of vehicles. If true, the bill would not just block Chinese-linked competitors, it would hand a domestic pricing advantage to one specific American manufacturer.
GM pushed back on the accusation. The company said it "supports policies that protect and strengthen American manufacturing and the global competitiveness of U.S. automakers" and insisted the legislation does not target an individual automaker.
"As we have said many times, we can compete with anyone in the world when we are given a level playing field."
That claim sits uneasily beside Cruz's charge. If GM lobbied for a battery provision that raises costs for competitors while benefiting its own supply chain, "level playing field" is a generous description.
Mercedes-Benz responded cautiously. The company said it "continues to support legislation designed to protect U.S. national security" but stressed that any bill must not disrupt its American operations. Mercedes-Benz highlighted its extensive U.S. presence and pledged to "safeguard its employees, dealers, suppliers and customers."
The company's predicament is real. Mercedes-Benz is not a Chinese automaker. It is a German manufacturer with deep American roots, factories, dealerships, and a supply chain that supports American jobs. But its shareholder register includes two Chinese investors whose combined stake crosses the bill's 15 percent threshold. That alone would trigger the ban.
Whether Congress intended to sweep in a company like Mercedes-Benz or simply failed to anticipate the consequences of a blunt ownership test is an open question. Either way, the result is the same: a bill sold as a shield against Chinese surveillance could end up punishing a longstanding U.S. market participant that happens to have minority Chinese investors.
Moreno pointed to several moves by major automakers as evidence the bill is already reshaping industry behavior. GM intends to move production of the Chinese-made Buick Envision to the United States for the 2028 model year. Ford agreed to transfer production of Chinese-made Lincoln vehicles to U.S. facilities. And Waymo, Google's self-driving vehicle company, committed to exploring a Detroit-based manufacturer for its future platforms after previously holding talks with Geely, a Chinese automaker.
"I view that as a big victory," Moreno said.
Those shifts are worth noting. If the threat of legislation alone is enough to pull manufacturing back to American soil, the bill's sponsors can claim a tangible result before a single vote on the Senate floor. But the same blunt instrument producing those wins is also the one that could ban Mercedes-Benz, a company that already builds cars in the United States.
The bill does not operate in a vacuum. The Trump administration already banned Polestar, the Sweden-based automaker majority-owned by Geely, from selling new connected vehicles in the U.S. starting with the 2027 model year. Volvo Cars, a sister brand and co-founder of Polestar, said in May it received a green light to continue selling cars in the American market.
The Polestar ban shows the administration is willing to act on Chinese-linked vehicle concerns without waiting for Congress. The proposed legislation would go further, locking those restrictions into statute and expanding them beyond any single company.
The bill still must pass the full Senate and the House before reaching the president for a signature. That process gives lawmakers time to address the Mercedes-Benz problem Cruz identified, and to scrutinize whether provisions allegedly backed by GM serve national security or corporate self-interest.
Several critical details remain unclear. The bill's official name and number have not been widely reported. The specific identities of the two Chinese investors in Mercedes-Benz, and their individual ownership percentages, are not spelled out. The vote count by which the Commerce Committee advanced the measure has not been disclosed. And the precise scope of the Commerce Department authorization process, the escape valve for companies caught by the ownership threshold, remains vague.
Protecting American roads from Chinese surveillance is a legitimate goal, and one that draws genuine bipartisan support. But legislation that accidentally bans Mercedes-Benz while allegedly padding GM's bottom line is not a national security bill, it is a mess. Congress has time to fix it. Whether it will is another question entirely.
