Senate Bill Puts Mercedes-Benz Sales at Risk Under 15% Ownership Test
A U.S. Senate committee advanced the Connected Vehicle Security Act of 2026 on July 22, moving a proposal that could make Mercedes-Benz ineligible to sell some connected vehicles because reported Chinese ownership exceeds a proposed 15% limit. The Senate Commerce Committee recorded the amended bill as advancing by voice vote, while its sponsors described the support as unanimous. The important engineering-policy distinction is that this potential restriction would arise from an ownership test not a documented defect in Mercedes-Benz hardware, software or cybersecurity controls.
The measure has not become law. It must still receive full Senate consideration, and its language could change during the legislative process. There is therefore no immediate prohibition on Mercedes-Benz sales, imports or dealer operations.
Why Mercedes-Benz could cross the proposed line
Mercedes-Benz is headquartered in Stuttgart, Germany, but its ownership structure could place it within the bill’s reach. BAIC reportedly owns 9.98% of the automaker, while Geely founder Li Shufu controls another 9.69%. Together, those stakes total approximately 19.67%-4.67 percentage points above the proposed 15% threshold for ownership by Chinese interests.
That calculation illustrates the bill’s central compliance issue. Conventional vehicle certification evaluates whether a product meets defined requirements involving safety, emissions and other regulated characteristics. The proposed connected-vehicle test would add a different kind of gate: corporate ownership could affect market eligibility even without a finding that a particular vehicle, electronic control unit or communications module is unsafe or compromised.
Supporters present the legislation as a way to limit surveillance and national-security risks from vehicles, software and hardware linked to China and other designated countries, including Russia, Iran and North Korea. Those concerns are the stated rationale for the policy; they are not established findings that Mercedes-Benz vehicles transmit information to a foreign government.
A broader compliance system, not only a sales restriction
The legislation would build on connected-vehicle regulations finalized by the Commerce Department in January 2025. Those existing measures apply restrictions to covered Chinese- or Russian-linked vehicle software beginning with the 2027 model year and to covered connectivity hardware beginning in 2030. They address technologies such as vehicle connectivity systems and associated software rather than treating every electronic component as equivalent.
The proposed statute would direct the Commerce Department to establish a declaration-of-conformity process, authorization and waiver procedures, and mechanisms for binding rulings and advisory opinions. For manufacturers, those provisions matter because ownership screening alone cannot resolve every supply-chain configuration. A workable compliance system also needs defined evidence requirements, supplier traceability and timely decisions about whether a vehicle or component is covered.
Mercedes-Benz reportedly could have until 2030 to comply and could seek a waiver. The final implementation schedule and waiver criteria, however, will depend on the enacted text and subsequent Commerce Department procedures. Until those details are settled, automakers cannot know whether compliance would require an ownership change, supply-chain changes, a favorable agency determination or some combination of those measures.
U.S. production complicates a simple foreign-ownership rule
Mercedes-Benz has assembled vehicles in Alabama for nearly three decades and says it has more than 10,000 U.S. employees, with assembly operations in Alabama and South Carolina. A fixed ownership threshold would not necessarily distinguish between an imported vehicle and one assembled in the United States with domestic labor and a multinational component base.
That creates a systems-integration tradeoff. A bright-line percentage can be comparatively straightforward to administer, but it may classify an entire automaker based on its shareholders rather than the architecture, provenance and data behavior of individual vehicle systems. A case-by-case security review could better account for technical controls and U.S. manufacturing, but it would also require more agency expertise, documentation and review time.
Mercedes-Benz reportedly wants the threshold raised to 25%, which would put its currently reported 19.67% combined Chinese ownership below the limit. Lawmakers are also considering replacing the fixed percentage with individualized security reviews. Either revision would materially change the company’s exposure, but neither is assured.
The practical issue is larger than one automaker. Connected vehicles combine communications hardware, cloud services, software updates, location data and globally sourced electronics. Security regulation must account for that full chain, yet it also needs predictable boundaries so manufacturers can certify products and plan production. For Mercedes-Benz, the decisive variable may ultimately be neither where its vehicles are engineered nor where they are assembled, but how Congress chooses to translate corporate ownership into a test of connected-vehicle risk.
By Thomas Caldwell — AMI’s senior editor for mechanical and mobility engineering, covering vehicle electronics, systems integration, electrification, chassis systems, propulsion, and safety policy.
