U.S. lawmakers are advancing legislation that could inadvertently sideline one of the world’s most iconic luxury automakers from the American market. The Motor Vehicle Modernization Act of 2026 (H.R. 7389), introduced by Rep. Brett Guthrie (R-KY) in February and recently advanced through the House Energy and Commerce Committee, aims to curb Chinese influence in the U.S. auto sector. It would prohibit any automaker with more than 15% direct or indirect equity ownership by a “foreign adversary” government — including China — from importing, selling, or manufacturing vehicles in the United States.
Mercedes-Benz Group AG finds itself squarely in the crosshairs. Its largest individual shareholder is China’s state-owned BAIC Group, holding a 9.98% stake. Chinese billionaire Li Shufu, founder of Geely, controls an additional 9.69% through his investment vehicle. Combined, these Chinese-linked holdings total nearly 20%, exceeding the bill’s threshold.
The stakes are enormous. Mercedes-Benz employs thousands of American workers across manufacturing facilities, notably in Alabama, where it has invested heavily in production. Industry estimates suggest that a ban could jeopardize tens of thousands of jobs, including direct employment, supplier networks, and dealership operations. The company sells hundreds of thousands of vehicles annually in the U.S., a critical market for its luxury lineup.
The bill includes some exemptions for long-standing U.S. manufacturers, but these carve-outs explicitly do not apply to companies with foreign-adversary ownership ties. Sources indicate the provision was primarily designed to block Chinese EV makers like BYD from entering the market, but the broad language has unintended consequences for established players with historical partnerships in China.
Mercedes has deep roots in China, where it produces vehicles through joint ventures and derives significant sales. While these ties have fueled growth, they now pose a geopolitical risk amid rising U.S.-China tensions over technology, supply chains, and national security. Analysts suggest Mercedes may need to restructure ownership, divest stakes, or seek legislative exemptions to remain operational in America.
Proponents of the bill argue it protects U.S. jobs and technological edge from adversarial influence. Critics warn it could disrupt supply chains, raise consumer prices, and harm American workers in the short term. As the legislation moves toward a potential House vote, Mercedes-Benz is reportedly engaging with lawmakers to find solutions.
This episode underscores the complexities of globalized manufacturing in an era of strategic decoupling. For Mercedes, a brand synonymous with engineering excellence, the path forward may require difficult choices between its Chinese partnerships and access to the vital U.S. market.