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If you’ve been paying attention to headlines, you know that Mercedes‘ name has come up a lot regarding a potential ban resulting from a new bill to lock out any automaker from the U.S. market with more than 15% Chinese investment. The thing is, this country is too lucrative for Merc to simply exit, which is why it’s very important that CEO Ola Källenius finally came out and said that the brand has no intention of going anywhere.
“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.,” Källenius said, per Reuters, during the company’s Q2 earnings report. “We are not naive about the geopolitical environment and the competition between the United States and China.”
According to Källenius, Mercedes is “deeply involved” in conversations with officials to work this out, which you’d expect. Part of that could involve pouring even more money into U.S. manufacturing—something the luxury make is, of course, no stranger to already, with its main global SUV plant in Tuscaloosa, Alabama, and a battery plant nearby in Woodstock. The chief executive floated the possibility of a new engine factory, though that may depend on the outcome of USMCA negotiations.
Global sales of Mercedes’ passenger cars dropped 7% in the second quarter, but sales in the U.S. specifically rose by 10%. It wasn’t enough to counter a whopping 30% drop in China, though, if you’re Källenius, results like that make it pretty clear where you should focus your effort.
Unfortunately, the very market that deserves the attention is the one that’s actively threatening to push Merc out, as 20% of the company belongs to Chinese parties, beyond the newly proposed threshold of 15%. Last week, when the U.S. Senate Commerce Committee voted for the legislation, Bernie Moreno, the Republican Senator from Ohio who co-authored the bill with Democratic Senator Elissa Slotkin of Michigan, said that Mercedes “could get waivers if needed from the ownership requirement if necessary,” according to Reuters’ reporting.
Republican Senator Ted Cruz of Texas, the Committee’s chair, opposed the bill as it stands, saying that “we would never consider” banning Mercedes from the U.S. He also claimed that General Motors supported the measure to boot the German automaker from the states, in hopes that Cadillac could recapture its forfeited market share. GM, for its part, has denied that its advocacy of the bill is tied to any single competitor.
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Backed by a decade of covering cars and consumer tech, Adam Ismail is a Senior Editor at The Drive, focused on curating and producing the site’s slate of daily stories.
