Senate auto ban hits Mercedes snag, reshores US production
A US Senate panel advanced legislation to block Chinese automakers, but an ownership threshold threatens German rival Mercedes-Benz and pushes Detroit automakers to reshore supply chains.
Senators Bernie Moreno and Elissa Slotkin proposed legislation, approved by the Senate Commerce Committee on July 22, to codify the Biden administration’s effective ban on Chinese passenger vehicles. Senator Moreno said the bill ensures the US is "preventing an absolute, total, and complete destruction of our industrial base." However, a provision capping Chinese ownership at 15 per cent threatens to inadvertently penalise Mercedes-Benz.
The German manufacturer holds nearly 20 per cent passive Chinese investment, putting its US sales at risk. Committee Chair Ted Cruz flagged the flaw, stating the bill requires changes and that "we would never consider" banning Mercedes-Benz sales in the United States. Senator Moreno countered that Mercedes would have until 2030 to comply and could secure waivers.
Cruz accused General Motors of lobbying for the strict ownership rule to eliminate Mercedes and boost its Cadillac brand. GM denied targeting specific competitors, stating it "supports policies that protect and strengthen American manufacturing and the global competitiveness of US automakers."
Mercedes noted its extensive US operations, adding it "continues to support legislation designed to protect US national security." The company stressed it will "safeguard its employees, dealers, suppliers, and customers."
Beyond ownership thresholds, the bill is forcing supply chain shifts. GM plans to move production of its Chinese-made Buick Envision to the United States for the 2028 model year. "I view that as a big victory," Moreno said, noting Ford has also agreed to shift Chinese-made Lincoln production stateside.
The regulatory tightening is disrupting tech partnerships as well. Google’s Waymo has committed to looking at a Detroit-based manufacturer for future platforms, abandoning talks with Chinese automaker Geely.
These measures carry significant cost implications. Cruz noted a GM-backed battery provision would add $5,000 to vehicle prices, while an amendment to revise battery management software requirements, sought by Rivian, failed to pass.
The regulatory environment is already claiming casualties. Polestar, the Geely-owned Swedish EV maker, said the Trump administration is forcing it to halt US sales by the 2027 model year. Sister brand Volvo Cars secured authorization to continue selling but must still meet compliance requirements.
The sweeping rules stem from national security concerns over connected vehicle technologies. Bluetooth, Wi-Fi, cellular, and satellite systems are covered due to fears that foreign-built cars could harvest sensitive data on American drivers.
