A proposed US law designed to block Chinese-owned vehicle manufacturers from entering the American market could have an unintended consequence: preventing Mercedes-Benz from selling cars in the United States.

The proposal, approved this week by the US Senate Commerce Committee, would prohibit the sale of connected vehicles from manufacturers that are more than 15 per cent owned by Chinese entities. The legislation is aimed at strengthening restrictions on Chinese automotive companies and reducing potential national security risks linked to connected vehicle technology.

However, Mercedes-Benz could also fall within the scope of the bill because almost 20 per cent of the company is held by Chinese investors, including BAIC Group and Geely founder Li Shufu.

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The bill still has a long legislative path ahead and is expected to undergo further amendments before it can become law. Senate Commerce Committee chairman Ted Cruz acknowledged the current wording would inadvertently capture Mercedes-Benz and said revisions were needed.

Ohio Republican Senator Bernie Moreno, one of the bill’s sponsors, said Mercedes-Benz would have until 2030 to comply with the ownership requirements and could seek a waiver from the US Department of Commerce if necessary.

The legislation builds on connected vehicle security rules introduced during the Biden administration that restrict Chinese-developed hardware and software in vehicles sold in the US. Those measures target technologies including wireless communications and connected vehicle systems that US officials believe could present espionage or cybersecurity risks.

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The issue has already affected other brands with Chinese links. Volvo previously secured an exemption allowing it to continue selling connected vehicles in the US, while Geely-owned Polestar (above) announced last month it would cease US sales from the 2027 model year after its application was rejected.

Mercedes-Benz said it supports legislation that protects US national security while emphasising its longstanding investment in the country. The company employs thousands of workers across its US operations, including vehicle manufacturing in Alabama, and says it supports around 160,000 jobs through its broader American business.