US senators clash over scope of Chinese connected-vehicle ban

US senators broadly agree that Chinese connected vehicles should be kept off American roads. But a bipartisan attempt to codify and expand existing restrictions has exposed divisions over whether the proposed ban could ensnare European carmakers and increase costs for American electric-vehicle producers. The Senate Committee on Commerce, Science, and Transportation advanced the Connected Vehicle Security Act of 2026, a bill that would prohibit the import, manufacture and sale of connected vehicles linked to China and other foreign adversaries. It would also restrict the use of covered vehicle software and hardware on national security grounds. The bill would also prohibit vehicles made by companies with significant Chinese ownership. Under the bill, a connected vehicle could be prohibited if its manufacturer is more than 15 per cent owned or controlled by a Chinese entity or a combination of Chinese entities. “What we don’t want to do is [to] cede this entire industry to the Chinese,” said Senator Bernie Moreno, an Ohio Republican and the bill’s lead sponsor. “We will not commit industrial suicide, and we will not allow ‘automotive fentanyl’ to enter the United States of America.” The move to ban Chinese cars is not entirely new. Washington’s two long-running anxieties are reflected in this bill: the US auto industry’s fear of being undercut by Chinese competitors, and national security officials’ unease over how much data connected cars can send back to Beijing. If enacted, the legislation would largely codify the Commerce Department’s connected-vehicle restrictions on China and Russia, issued before the end of the Biden administration, while expanding them to cover Iran and North Korea and broadening several key provisions. The bill still faces a long legislative process ahead of consideration by both chambers and the president, and it also exposes divisions among lawmakers over how broad the restrictions should be. Committee Chairman Ted Cruz, a Texas Republican, warned that unless the legislation was narrowed, it would face a difficult path to becoming law. “The current language in the bill is overly broad,” Cruz said. “It goes beyond the national security risk that this legislation is intended to address.” Mercedes-Benz’s Chinese investors cause major flashpoint A major point of contention was the bill’s ownership threshold, which critics argued could inadvertently sweep in foreign carmakers with minority Chinese shareholders. Lawmakers repeatedly cited Mercedes-Benz, whose two major Chinese investors – BAIC Group and Geely chairman Li Shufu – each own a little less than 10 per cent of the company. Together, their stakes exceed the bill’s 15 per cent threshold, potentially bringing the German carmaker within the legislation’s scope. Cruz sharply criticised the provision, suggesting it was driven by politics rather than national security. “If the provision that is in the bill right now – the punitive provision attacking Mercedes – this bill will not become law,” he said. Cruz argued that it appeared to benefit General Motors by disadvantaging a competitor while also serving as retaliation from the auto workers’ union after Mercedes workers rejected unionisation efforts. Moreno rejected that characterisation, saying the legislation was “obviously not attacking Mercedes” and he was a Mercedes car dealer. He explained that affected companies would have time to adjust and could seek exemptions from the US Commerce Department. In a statement to the South China Morning Post, a Mercedes-Benz spokesperson said that none of the company’s major shareholders owns more than 10 per cent of the company, none has direct representation on the supervisory board or decision-making authority, and the company would continue to engage with US Congress and other stakeholders. “Mercedes-Benz remains committed to ensuring that any legislation does not adversely impact our employees, dealers, suppliers, customers and operations,” the spokesperson said. Cruz proposed an amendment to replace the bill’s fixed 15 per cent ownership threshold with a standard based on the Committee on Foreign Investment in the United States (CFIUS), which looks into actual control, arguing that CFIUS already has an established framework for determining foreign control. He later withdrew the amendment. Battery disputes cause even more disagreements Lawmakers also clashed over whether batteries should be included in the restrictions. Senator Tammy Duckworth, an Illinois Democrat, introduced an amendment to loosen the restriction and allow Chinese-made batteries, arguing that doing so would align the legislation with the US Commerce Department’s connected vehicle rule finalised during the Biden administration. “My colleagues know I am no dove,” Duckworth said. “I am looking for pragmatic solutions to give American companies the runway they need to innovate, survive, and take the leap in battery management issues.” Cruz backed the amendment, arguing it could save consumers about US$5,000 per vehicle. Moreno opposed the proposal, accusing electric vehicle maker Rivian of lobbying for the change because the company had “decided that it’s cheaper for them to go to China to assemble their batteries than it is to find a supply chain here”. The amendment failed 9-19 after Senator Gary Peters, a Michigan Democrat, argued that battery management systems with wireless communication capabilities could pose national security risks, and that excluding batteries would weaken efforts to reduce dependence on Chinese supply chains. “The text of the underlying bill would help break the Chinese choke point when it comes to the electric vehicle supply chain,” Peters said. Even Cruz warned that substantial revisions would be needed for it to become law; he voted yes on the bill. Liu Chang, a spokesperson for the Chinese embassy in Washington, said Beijing firmly opposes the US “overstretching the concept of national security” and using it to impose discriminatory restrictions on Chinese companies and products. The potential ban would “seriously undermine normal China-US cooperation in the connected vehicle sector, disrupt and distort global automotive industrial and supply chains, and ultimately harm the interests of American consumers,” Liu said.