After looking at some other animated shows roughly contemporaneous with M.A.S.K. and Exosquad, I came upon VOR-tech: Undercover Conversion Squad, also done by Universal Animation Studios.
The VOR-Tech Undercover Conversion Squad is a group of secret agents led by Hudson Roarke. Their mission is to stop Hudson’s older brother Damian Roarke — known as Lord Matrix — and his evil "Bio Mechs" from infecting the world with a techno-infectious plague. Similar to the M.A.S.K. franchise, the VOR-Tech agents had special masks and transforming vehicles, with special computer systems that imbue them and their vehicles with special powers.
They do have transforming vehicles (the. The series was put together because they planned a revival of M.A.S.K. but the Jim Carrey movie had just come out, making the name non-viable, so rather than scrap the molds from M.A.S.K., they just rebranded it.
It was cancelled after just one season, was never aired again, and never had a DVD release, so it's amazingly obscure, although this page has the intro and two scenes, one of which shows the "Bio Mechs", who indeed have tentacles. I have not found an episode list, so I don't know if there was indeed one where someone was partially transformed, but there is a mind control scene (which can be seen in the videos on the RetroJunk page), and it would fit the modus operandi of the "Bio Mechs".
Here is the toy of the ATV, "Battle Tracker":
