Mercedes-Benz Group AG (MBGYY), a German luxury automaker with major manufacturing operations in the United States, is seeking changes to a bipartisan Senate bill that could eventually prevent it from selling connected vehicles in the US because of its Chinese shareholders. The legislation, introduced in April by Michigan Senator Elissa Slotkin and Ohio Senator Bernie Moreno, would prohibit connected-vehicle sales by automakers that are more than 15% owned by Chinese entities. Mercedes is nearly 20% owned by Chinese investors, placing the company above the proposed threshold. The automaker is reportedly pushing lawmakers to increase the permitted ownership limit to 25%, which would match the cutoff proposed for suppliers of connected components and software.
Lawmakers are also considering replacing the fixed percentage with a broader assessment of potential national-security risks, a change that could be more favorable to Mercedes than the current proposal. Mercedes said no individual shareholder owns more than 10% of its stock and that no shareholder holds a board seat or authority over the company's operating decisions. BAIC Motor Corp., a Chinese state-owned automaker, owns nearly 10% of Mercedes, while Li Shu Fu, the billionaire founder and chairman of Chinese automaker Geely, holds another nearly 10%. The combined stakes would place Mercedes above the bill's 15% limit. The Senate Committee on Commerce, Science, and Transportation is expected to consider the legislation this week after postponing a hearing initially planned for last week, although discussions remain fluid and the bill may not ultimately become law.
The proposal could create a significant long-term risk for Mercedes in one of its largest and most important markets as the automaker continues to struggle in China. Companies already operating in the US would not face the restrictions until 2030, which would give Mercedes roughly three years to comply with the law or secure changes to the legislation. The company employs thousands of people in the US, has assembled vehicles in Alabama since the 1990s, operates another plant in South Carolina, and earlier this year announced plans to invest an additional $4 billion in its Alabama facility through 2030. Volvo Car AB, an automaker that would also exceed the proposed Chinese-ownership threshold, may be protected by a grandfathering provision linked to an existing agreement with the US government. Investors may therefore focus on whether lawmakers adopt a higher ownership limit, introduce a qualitative national-security test, or add a safe-harbor mechanism before the bill advances.