Mercedes-Benz vehicles sit parked, on the day U.S. President Donald Trump is set to announce new tariffs, at a dealership in Copiague, New York, U.S., April 2, 2025.\u00a0<\/p>\n
Shannon Stapleton | Reuters<\/p>\n
Mercedes-Benz<\/a> could find itself shut out of the U.S. auto market \u2014 banned from making or selling new vehicles in the country \u2014 under legislation making its way through Congress.<\/p>\n New bipartisan legislation aimed at limiting Chinese <\/a>involvement in the U.S. auto market may sweep in Mercedes-Benz unless the bill is changed or the German automaker’s largest shareholder<\/a> sells its stake. <\/p>\n The bill, the Motor Vehicle Modernization Act of 2026<\/a>, would prohibit automakers that have “any direct or indirect equity interest by a foreign-adversary government,” such as China<\/a>, from importing, selling or manufacturing vehicles for sale in the U.S.<\/p>\n Mercedes-Benz’s largest individual shareholder<\/a> is the state-owned Chinese automaker BAIC, formerly the Beijing Automotive Industrial Corp., with a 9.98% share. The potential implications of the legislation on the automaker are previously unreported. <\/p>\n Several people familiar with the legislation who spoke to CNBC cited grey areas in the bill that, depending on how they’re interpreted, could ban Mercedes-Benz from operating in the U.S. <\/p>\n Two sources who agreed to speak on the condition of anonymity for fear of repercussions or because they weren’t authorized to speak publicly said they believe the bill, as it’s currently written, would ban the company. <\/p>\n “The language is unambiguous,” said a former automotive policy advisor and lobbyist who was consulted about the bill.<\/p>\n A cap on foreign ownership<\/p>\n The bill comes as lawmakers in both parties seek to prevent Chinese automakers<\/a> from gaining a foothold in the U.S. market, even as Chinese ownership<\/a> already runs through parts of the global auto industry.<\/p>\n The bill, which is sponsored by House Energy and Commerce Committee Chairman Brett Guthrie, R-Ky., is currently a House-only initiative with no Senate companion<\/a>. It includes exemptions for China-backed companies, but not if they’re directly or indirectly owned by the Chinese government.<\/p>\n Automakers that have manufactured passenger vehicles in the U.S. for at least five years before Jan. 1, 2026, could qualify for an exemption. But the bill says that exemption does not apply to companies with “any direct or indirect equity interest by a foreign-adversary government.” <\/p>\n China<\/a> is listed as a foreign adversary along with Russia<\/a> and North Korea<\/a>.<\/p>\n The bill aims to ban companies with such ownership from manufacturing, selling or importing vehicles in the U.S. for five years upon enactment of the legislation.<\/p>\n It’s unclear where the ownership language originated or whether Mercedes-Benz was inadvertently targeted, but Chinese ownership<\/a> has been a major concern for U.S. politicians<\/a>. Last year, the Trump administration signed off on a deal to keep social media platform TikTok operating in the U.S.<\/a> via the creation of a new entity, in which a mix of U.S. investors and Abu Dhabi-based MGX control a majority stake while China’s ByteDance retains nearly 20%.<\/p>\n Daniel Kelly, press secretary for the Energy and Commerce committee, confirmed the details of the legislation. He declined to comment directly on potential impacts for individual companies, including Mercedes-Benz.<\/p>\n A spokesman for Mercedes-Benz, which has two large assembly plants<\/a> and reports employing more than 11,000 people in the U.S., declined to comment, citing a company policy against commenting on pending legislation.<\/p>\n Though BAIC<\/a> is a company owned by the Chinese government<\/a>, the bill also includes limits on companies “controlled by” a foreign adversary, defined as a 15% stake by a “person or combination of foreign persons.”<\/p>\n Mercedes-Benz’s second-largest individual shareholder is Chinese billionaire Li Shufu<\/a>, founder and chairman of China-based Geely, through his Tenaciou3 Prospect Investment<\/a> firm. That stake amounts to 9.69% of Mercedes-Benz shares.<\/p>\n Combined, Shufu and BAIC own 19.67%<\/a> of Mercedes-Benz Group AG, the parent company of the automaker as well as its brands and financial services.<\/p>\n A separate piece of recently introduced legislation includes a similar 15% ownership stipulation<\/a>. That bill, the Connected Vehicle Security Act of 2026<\/a>, was introduced in the Senate by Sens. Bernie Moreno<\/a>, R-Ohio, and Elissa Slotkin<\/a>, D-Mich., and in the House by Reps. John Moolenaar<\/a>, R-Mich., and Debbie Dingell<\/a>, D-Mich. But exemptions under that legislation have yet to be determined.<\/p>\n The 15% ownership clause, depending on exemptions, could also impact other automakers with Chinese ownership<\/a>, such as Volvo and smaller manufacturers like Faraday Future<\/a>, Lotus<\/a> and Karma Automotive<\/a>. <\/p>\n ‘Details matter’<\/p>\n Mercedes-Benz’s largest U.S. plant is in Tuscaloosa, Alabama. The massive facility has produced more than 4.5 million vehicles since it began production in 1997, according to a company website<\/a>.<\/p>\n The German automaker’s lobbying efforts have been minimal in recent years, and bipartisan, according to public records, though it also lobbies through at least two trade associations for automakers to which it belongs.<\/p>\n John Bozzella<\/a>, CEO of The Alliance for Automotive Innovation<\/a>, in a letter last week to Guthrie and Energy & Commerce ranking member Rep. Frank Pallone, D-N.J., described the bill as making “substantial progress on several policy priorities that the auto industry in America shares with members of the committee.”<\/p>\n Bozzella wrote China’s strategy to “dominate global automotive manufacturing” poses “a clear and present danger to American economic and national security.” <\/p>\n He said the organization, which represents nearly every major automaker in the U.S., would continue working with lawmakers to get the policy right, adding “details matter.” <\/p>\n The lobbying group declined to comment on the bill’s potential impact on specific automakers.<\/p>\n Autos Drive America<\/a>, another lobbying group for foreign automakers that includes Mercedes-Benz, also declined to comment on the potential impact, referring to a prior statement regarding the Connected Vehicle Security Act about supporting the “overall goal of this legislation” while ensuring it “does not lead to unintended consequences that could create challenges for U.S. manufacturing.”<\/p>\n The new bills are in addition to previously enacted restrictions<\/a> on the import and sale of connected vehicles with software from countries such as China starting with the 2027 model year<\/a> as well as hardware from those countries starting with the 2030 model year<\/a>.<\/p>\n Connected vehicles<\/a> have internet access and wireless connectivity with other cars or trucks, technology that supporters say can enhance roadway safety.<\/p>\n Volvo<\/a>, which is majority-owned by Shufu’s Geely, said on Tuesday<\/a> that it received specific authorization from the U.S. government to bypass federal bans restricting connected vehicle software<\/a> and hardware linked to China.<\/p>\n Volvo confirmed its special authorization but did not immediately respond to questions about the other bills and their potential impact on the company. <\/p>\n Volvo Cars sold 121,600 vehicles<\/a> in the U.S. last year. Mercedes-Benz sold 303,200 passenger cars and 12,400 vans<\/a> in the country during the same period.<\/p>\n