It was pretty shocking for the five Polestar drivers in the United States when the automaker announced it was leaving the market. Now a much bigger name could be next, and this one builds cars in Alabama.
Mercedes-Benz. Yes, really.
First, two different rules doing two different things
This is where most coverage gets muddled, so let’s separate them.
The first is the Connected Vehicle Rule, a Commerce Department regulation already in force. It restricts cars with connectivity or automated driving tech tied to China or Russia, and it works case by case: automakers apply, Commerce says yes or no. That’s the one that got Polestar shown the door in June, denied authorization from the 2027 model year.
Polestar shrugged it off, since 94% of its first-quarter sales happened outside America anyway. The absurd part is that Volvo, owned by the same Chinese parent, was approved weeks earlier. And the Polestar 3 rolls off the same South Carolina assembly line as the fully approved Volvo EX90.
The second is the Connected Vehicle Security Act, a bill that would write all this into law and go much further. It cleared the Senate Commerce Committee unanimously on July 22, sponsored by Senators Bernie Moreno of Ohio and Elissa Slotkin of Michigan, two states that build a lot of cars.
Starting January 2027, it would bar the import or sale of connected vehicles from companies tied to China, Russia, Iran or North Korea. And it adds a hard number the existing rule doesn’t have: any automaker more than 15% owned by Chinese entities is out. For software and hardware suppliers, the threshold is 25%.
That 15% is where Mercedes falls in.
Two shareholders, twenty percent, one very big problem
Here’s the math nobody at Mercedes wants to explain again. BAIC, a Chinese state-owned automaker, holds 9.98% of Mercedes-Benz Group, making it the single largest individual shareholder. Li Shufu, the billionaire founder of Geely, holds roughly another 10%.
Add them up and you get about 20% Chinese ownership. The bill’s cutoff is 15%. You can see the problem.
These are passive financial stakes, not operational control, but as the bill is currently drafted that distinction doesn’t matter. A German luxury brand would be filed alongside Chinese state-owned manufacturers and shown the same exit.
Ted Cruz says the quiet part out loud
Now the fun part. During the committee markup, Chairman Ted Cruz, who supports the bill overall, accused a very familiar company of engineering that 15% number on purpose.
“GM is pushing for this provision to get Mercedes-Benz out of the market,” Cruz said, adding that the goal was making Cadillac more competitive. He also said flatly that lawmakers would never consider banning Mercedes from the United States, and that he’d push to change the provision.
GM did not immediately respond to requests for comment, per CNBC. GM is currently the top-selling automaker in America.
Senator Moreno offered the softer version: Mercedes would have until 2030 to come into compliance and could apply for Commerce Department waivers in the meantime. Lawmakers are also reportedly weighing whether to scrap the flat percentage entirely and replace it with a case-by-case national security review.
Hm. It really seems like there are a lot of asterisks in this possible bill.
And that’s before you look at the supply chain
There would have to be asterisks, because almost nothing on wheels is 100% American anymore, including cars from domestic automakers.
Cruz himself flagged that the bill needs work on batteries, since American EV makers lean heavily on Chinese cells and battery management systems. Ford, meanwhile, is currently seeking authorization for its China-built Lincoln Nautilus, and just signed a joint venture with Geely to build cars at its plant in Valencia, Spain. Chinese partnerships are fine over there, apparently.
It starts to feel like virtue signaling to write a law this strict and then carve out exceptions for everyone who complains loudly enough. What is even the point?
Mercedes is not panicking, but it is lobbying
Mercedes has been making its case in Washington, leaning on a genuinely deep American footprint: more than 10,000 US employees and assembly plants in Alabama and South Carolina. The Alabama-built GLE just had its best sales year ever, up 14%.
The company’s ask is simple: raise the threshold from 15% to 25%, which would put it comfortably in the clear.
Publicly, the tone is calm. Mercedes told Motor Trend it has a “broad and diversified shareholder base,” noting that no single shareholder holds more than 10% of its stock, that its major shareholders sit on neither the Supervisory Board nor in any decision-making role, and that operational decisions belong solely to its Board of Management.
The stakes are higher than that measured statement suggests, though. Mercedes sold 303,200 passenger cars here in 2025, and its China sales just fell about 30% in the second quarter of 2026. Losing America right now would be catastrophic timing.
The bill still has to clear the full Senate, the House, and reach the president’s desk, and the unanimous committee vote hid real disagreement about the wording. Plenty could change.
But that’s the situation: a German company with Alabama factories, Ohio and Michigan senators writing the rules, and Cadillac quietly waiting to see how it shakes out. Would you call that national security, or just a very well-timed favor?
