A bipartisan Senate proposal aimed at limiting China’s influence over the U.S. auto industry could have an unexpected casualty: Mercedes-Benz.

The legislation, which advanced through the Senate Commerce Committee last week, would prohibit the sale of connected vehicles in the United States by automakers with more than 15% Chinese ownership. If enacted without revisions, the measure could block Mercedes-Benz from selling many of its vehicles in the U.S. because two Chinese investors collectively own nearly 20% of the company.

The proposal is part of a broader push by lawmakers to strengthen national security and reduce China’s access to sensitive data collected by internet-connected vehicles.

Why Mercedes-Benz Is Suddenly at Risk

The bill, introduced by Sens. Elissa Slotkin (D-Mich.) and Bernie Moreno (R-Ohio), would permanently expand restrictions first introduced during the Biden administration.

Modern connected vehicles continuously collect data ranging from GPS locations and driving habits to camera footage and vehicle diagnostics. Lawmakers backing the bill argue that foreign ownership creates a potential pathway for sensitive American data to reach Beijing.

Slotkin described Chinese-connected vehicles as “surveillance packages on wheels,” arguing the legislation would prevent data collected on American roads from being transmitted to the Chinese government.

Because Mercedes-Benz has roughly 20% passive ownership from Chinese investors, it exceeds the bill’s proposed ownership threshold despite being headquartered in Germany.

Lawmakers Split Over the Bill’s Consequences

While the measure received bipartisan support in committee, not every Republican agreed with its current form.

Senate Commerce Committee Chairman Ted Cruz (R-Texas) warned that the legislation could unintentionally eliminate one of the world’s best-known luxury automakers from the U.S. market.

Cruz argued that Congress never intended to ban Mercedes-Benz and suggested the bill should be revised before moving forward.

He also accused General Motors (NYSE: GM) of supporting provisions that could weaken foreign luxury competitors while benefiting Cadillac.

GM rejected that claim, saying it supports policies that strengthen American manufacturing while maintaining fair competition.

Mercedes Highlights Its American Footprint

Mercedes-Benz responded by emphasizing its significant U.S. operations, including its major manufacturing facility in Alabama, where thousands of vehicles are built annually.

The company said it supports legislation designed to protect U.S. national security while working to ensure any new law does not disrupt its American employees, dealers, suppliers, or customers.

The proposal also includes a process allowing automakers to seek Commerce Department approval for vehicles that would otherwise be prohibited.

The Crackdown Extends Beyond Mercedes

The legislation reflects a broader effort by Washington to reduce dependence on Chinese-made vehicles and automotive technology.

Last month, the Trump administration barred Polestar from selling new connected vehicles in the United States beginning with the 2027 model year because the company is majority-owned by China’s Geely.

Meanwhile, Volvo Cars, another Geely-backed automaker, previously received approval to continue selling vehicles in the U.S.

Sen. Moreno also said the legislation has already encouraged automakers to move production back to the United States.

According to Moreno:

General Motors plans to relocate production of the Buick Envision from China to the U.S. by the 2028 model year.
Ford has agreed to shift production of certain Chinese-built Lincoln vehicles to American factories.
Google’s self-driving company, Waymo, is reportedly exploring Detroit-based manufacturing partners instead of sourcing future vehicle platforms from China.

Why Investors Should Watch

The proposal underscores how national security concerns are becoming a major force shaping the global automotive industry.

If the legislation ultimately becomes law, automakers with significant Chinese ownership or supply-chain exposure could face new regulatory hurdles in one of the world’s largest vehicle markets.

For investors, the bill also highlights an emerging trend: geopolitical considerations are increasingly influencing corporate valuations, manufacturing decisions, and supply-chain strategies alongside traditional financial metrics.

The legislation must still pass both the full Senate and House of Representatives before reaching President Trump’s desk for final approval. Until then, the proposal remains subject to negotiation and possible revisions, particularly regarding how ownership thresholds would apply to companies like Mercedes-Benz.