A Sweeping New Bill Could Cut Mercedes, Volvo, and Others From the U.S. Market

Ahhh, government. Always there to make things more complicated and costly. Even for established automakers like Mercedes-Benz, which has built vehicles in Alabama for over thirty years. A new bill in Washington might shut that down.

Legislation advancing in congress would ban any automaker that has Chinese ownership from selling connected vehicles (basically all vehicles now) in the U.S. Called the Connected Vehicles Security Act, the bill would prohibit the sale or import for sale of connected cars from any automaker that is more than 15 percent owned by “foreign adversaries.”

That last term is defined as China. Where the “15 percent” comes from is anyone’s guess. Politicians aren’t usually very logical. Why not “no percent” or “50 percent?” Somehow, 15 is the magic number where adversaries can suddenly do bad things.

The Bill was introduced by the senator from Ohio, where they make Jeeps and Hondas, and the House version by the representative from Michigan. No surprise there. Co-sponsors run the gamut of states with the obvious Michigan and Tennessee, both big automotive production states, included. Including one of the senators from Alabama, which would potentially lose Mercedes-Benz over this. That guy doesn’t like his job, clearly, and seems to think this might springboard him into the governor’s seat instead. Like I said, politicians aren’t known for logic.

Speaking of, Mercedes-Benz, globally, is about 20 percent owned by investors linked to China. About half of that 20 percent is China’s state-owned BAIC investment fund and the other half is Li Shufu, founder of Geely Auto in Hangzhou. Which means Mercedes would be subject to the ban if this law were to pass. Because for some reason, 20 percent is bad, but 15 percent isn’t. Again, D.C. logic here.

The reality, of course, is that Mercedes would likely buy out its shares from one or both Chinese parties to get under that 15 percent barrier. A mere $2.8B investment in today’s market prices. Way less than Elon spent to get Twitter, but about a third of Mercedes’ global profits last year.

Anyway, BAIC and Shufu would likely agree to selling some of their interests back to MB because their shares’ value would drop significantly if Mercedes were cut out of the U.S., it’s largest market. All so that some arbitrary number 15 can be found.

None of this would be so easy for Volvo, which sees about 17 percent of its global sales happening in the U.S. Volvo is wholly owned by Chinese interests. Same with its performance EV arm Polestar. The latter has already basically left the U.S. market anyway, since EVs aren’t selling well and that brand in particular was going nowhere here. Volvo is owned by Geely, Shufu’s company, as one of its overall automotive brands. Just like Stellantis (Chrysler, Jeep, et al) operates its brands as American even though they haven’t been owned by anyone in the U.S. for most of their existences, Volvo operates as a Swedish brand even though it’s owned by China. Ditto Jaguar Land Rover, which is owned by a company in India (Tata Motors). Welcome to the global economy.

What most don’t know is that likewise, GM’s Buick and Ford’s Lincoln would see the Envision and Nautilus utilities no longer eligible for U.S. sales because of this bill. Those are entirely made and imported from China. Not that they sell that well here. But that’s not the point.

The point is this magic 15 number. I could understand if congress chose a cool number like 7 or 13 or 21 or something culturally relevant like that. Instead, it’s 15. What a dumb number to hinge everything on.

This article originally appeared on the AaronOnAutos Substack.

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