China's 20% Mercedes Stake Fuels Connected Vehicle Act Push

The Connected Vehicle Security Act, cleared by the Senate Commerce Committee on July 22, would codify a ban on Chinese-connected vehicles — supporters argue Chinese automakers are instruments of state industrial policy.

"Chinese automakers aren't entering world markets as ordinary commercial competitors. They are the sharp end of a national industrial strategy that threatens to deindustrialize the U.S.," Michael Dunne, CEO of Dunne Insights LLC, wrote in a letter to the Wall Street Journal.

Dunne's letter, published in response to a July 27 Journal editorial, points to Chinese ownership of roughly 20 percent of Mercedes-Benz through BAIC Group, a state-owned auto enterprise, and an investment vehicle controlled by Geely founder Li Shufu. The bill, introduced in April by Sens. Bernie Moreno (R., Ohio) and Elissa Slotkin (D., Mich.), would ban import, manufacture, sale, and operation of covered vehicles and components from countries of concern. A House companion is led by Reps. John Moolenaar (R., Mich.) and Debbie Dingell (D., Mich.).

The stakes extend beyond trade policy. The Commerce Department's Bureau of Industry and Security finalized a connected-vehicle rule in January 2025 that prohibits, starting with model year 2027, the import or sale of vehicles containing software designed by Chinese or Russian entities — and bars manufacturers subject to Chinese or Russian jurisdiction from selling connected vehicles in the U.S. at all, regardless of assembly location. Hardware prohibitions land at model year 2030. Ford CEO Jim Farley told employees in a town hall that Chinese automakers could enter the U.S. market within five to ten years, and the company is spending roughly $5 billion on its Universal EV Platform to compete.

The Regulatory Architecture

The BIS rule, which covers vehicles under 10,001 pounds, requires annual Declarations of Conformity and carves out an exemption for hardware imported to repair or warranty vehicles from model years before 2030. The 100 percent Section 301 tariff on Chinese electric vehicles, locked in by USTR's four-year review effective September 2024, stacks on top of the standard 2.5 percent passenger-car rate — but a tariff is a price barrier, and price barriers are negotiable. The BIS rule is a prohibition, and prohibitions are not.

That distinction explains why the industry wants the framework in statute. The Alliance for Automotive Innovation told a House committee in December that China poses "a clear and present threat" to the U.S. auto industry and asked Congress to block Chinese automakers and battery makers from establishing plants on American soil. The White House has been less categorical: at the Detroit Economic Club in January, the President said he'd welcome Chinese firms building plants and hiring American workers. Days later, Farley floated a framework to the Trade Representative, Transportation Secretary, and EPA Administrator: let Chinese automakers in, but only through joint ventures where the American partner holds control and both sides share profit and technology — the exact arrangement Beijing imposed on Western automakers for three decades.

What Detroit Is Building Against It

Ford already has a Chinese partner — just not in the U.S. On July 23, Ford and Geely announced a two-thirds/one-third joint venture at Ford's Valencia, Spain plant, pending regulatory approval, with operations starting in the first half of 2027 and vehicles in 2028. Ford gets three multi-energy models including a new Bronco-family entry; Geely gets two electric SUVs and EU-domiciled assembly capacity. Geely's own release noted 474,228 overseas sales in the first half of 2026, up 158 percent year over year.

The counterpunch is the Universal EV Platform, unveiled in August 2025 — roughly $5 billion total, about $2 billion of it into Louisville Assembly, with a first product targeting $30,000 and customer deliveries in 2027. The engineering targets are aggressive: 20 percent fewer parts, 25 percent fewer fasteners, 40 percent fewer workstations, and a wiring harness roughly 1.3 kilometers shorter and 10 kg lighter than Ford's first-generation electric SUV. Ford's December pivot killed the F-150 Lightning as a pure BEV in favor of an EREV with a generator-backed range target north of 700 miles, and the company now targets about 50 percent of global volume as hybrids, EREVs, and EVs by 2030, versus 17 percent in 2025.

Ford's second quarter delivered $2.5 billion in adjusted EBIT and a raised full-year outlook of $10 to $11 billion, but Model e still lost $919 million in three months. Farley has said publicly that Chinese capacity could "put us all out of business."

For buyers, the near-term picture is unchanged: even the optimistic reading of Farley's timeline puts first retail deliveries of Chinese-brand vehicles in the 2031-2033 range, and any legal path in almost certainly runs through domestic assembly, American labor rates, and a JV structure that erases most of the cost advantage. The $20,000 Chinese hatchback selling in Mexico is not the car that would show up in Georgia. The real question is whether the Connected Vehicle Security Act becomes law before that timeline arrives — and whether Detroit's $5 billion bet on its own platform closes the cost gap first.

This article is for informational purposes only and does not constitute investment advice.