Mercedes-Benz has pledged to protect its U.S. operations from any potential restrictions stemming from Washington’s growing scrutiny of Chinese influence in the automotive industry, as proposed legislation could complicate the German luxury carmaker’s access to one of its strongest-performing markets.
The commitment comes after the U.S. Senate Commerce Committee last week advanced legislation aimed at tightening restrictions on Chinese automakers operating in the United States. While the bill is primarily designed to curb the expansion of Chinese vehicle manufacturers, its broad language has raised questions about whether companies with significant Chinese ownership, including Mercedes-Benz, could also face heightened regulatory scrutiny.
Chief Executive Officer Ola Kaellenius said the company would take whatever steps are necessary to preserve its position in the United States.
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“If we need to make adjustments to comply with anything, we will make sure that we protect our presence and our business in the U.S.,” Kaellenius said while presenting the company’s second-quarter results.
“We are not naïve about the geopolitical environment and the competition between the United States and China,” he added, noting that Mercedes is closely monitoring developments in Washington and remains “deeply involved” in discussions with relevant stakeholders.
The concerns stem from Mercedes-Benz’s shareholder structure. Chinese state-owned automaker BAIC Group and Geely founder Li Shufu together own nearly 20% of the company’s listed shares, making them its two largest shareholders. Although these holdings do not give Chinese investors operational control over Mercedes, they have become a focal point as Washington broadens efforts to limit China’s influence over strategic industries and critical technologies.
The issue underpins how geopolitical tensions are increasingly reshaping the global automotive industry, where ownership structures, supply chains and investment partnerships are receiving the same level of scrutiny once reserved for telecommunications and semiconductor companies.
The United States has become an important pillar of Mercedes’ global strategy as its business in China continues to deteriorate.
Like other German premium manufacturers including BMW and Volkswagen, Mercedes has struggled to maintain market share in China amid the country’s rapid transition to electric vehicles. Domestic manufacturers such as BYD and several emerging Chinese EV makers have gained ground with technologically advanced models, aggressive pricing and faster product development cycles, eroding the dominance long enjoyed by European luxury brands.
Against that backdrop, Mercedes has accelerated investment in the United States, where demand for its high-margin combustion-engine SUVs and luxury vehicles remains resilient. The company has committed more than $7 billion to expand its U.S. operations, including $4 billion through 2030 to increase SUV production at its Alabama manufacturing facility. The investment aligns with President Donald Trump’s broader push to encourage foreign manufacturers to expand domestic production and reduce reliance on imports.
Kaellenius also said Mercedes is evaluating the possibility of establishing engine production in the United States, depending on the outcome of ongoing negotiations to revise the North American trade agreement. Any new local-content requirements could encourage the automaker to deepen its manufacturing footprint in the country.
Building more vehicles and components in America would not only help Mercedes navigate possible regulatory changes but could also reduce its exposure to tariffs and strengthen its competitive position in one of the world’s most profitable luxury vehicle markets.
The strategy appears justified. Mercedes reported that U.S. sales rose 15% during the first six months of the year, providing an important offset to weakness in China. The company’s American business is also more profitable because consumers continue to favor larger gasoline-powered SUVs and premium vehicles that generate substantially higher margins than electric models, whose production remains more expensive.
Independent automotive analyst Matthias Schmidt said the economics strongly favor expanding U.S. production.
“If you are manufacturing locally in the U.S., it is a license to print money,” Schmidt said.
Washington has steadily expanded restrictions on Chinese participation across sectors ranging from semiconductors and artificial intelligence to connected vehicles, citing concerns over technology transfer, data security and strategic dependence.
If enacted, the proposed legislation could establish a precedent in which foreign companies with substantial Chinese ownership or investment face greater regulatory examination, even when they are headquartered in allied countries.
However, Mercedes-Benz safeguarding its U.S. business has become more important now. With China no longer delivering the growth and profitability it once did, the United States is emerging as one of the company’s most critical earnings engines. That makes preserving unrestricted access to the U.S. market a strategic priority.