Foley Automotive Update

Key Legal Insights from Foley’s Automotive Team

Analysis by Julie Dautermann, Competitive Intelligence Analyst

Foley is here to help you through all aspects of rethinking your long-term business strategies, investments, partnerships, and technology. Contact the authors, your Foley relationship partner, or our Automotive Team to discuss and learn more. 

KEY DEVELOPMENTS

• Foley & Lardner Partners Vanessa Miller and Nicholas Ellis, as well as Associate William Kalas, assessed the ramifications of the Michigan Supreme Court’s decision to dismiss the appeal of FCA US LLC v. Kamax Inc., “a case of considerable importance to manufacturers—particularly automotive suppliers—that commonly utilize requirements contracts to govern long-term supply arrangements.”

• Foley & Lardner announced the launch of the 2026 AI in Manufacturing & Supply Chain Series, a new initiative to help industry participants identify and manage the legal risks and business strategies arising from the profound shifts and innovations reshaping manufacturing and supply chain operations. Subscribe here to get updates about new articles in this series.

• Foley & Lardner Partners Vanessa Miller and Nicholas Ellis, as well as Senior Counsel Robert Okonowski and Associate Leighton Allen, will be among the speakers at MEMA’s Q2 Supplier Industry Briefing: Industry Strategy, Policy & Innovation Outlook to be held May 13, 2026 in Pontiac, Michigan. 

• Foley & Lardner provided an overview for multinationals to consider regarding filing for IEEPA tariff refunds under the U.S. Customs and Border Protection’s (CBP) Consolidated Administration and Processing of Entries (CAPE) system. Foley & Lardner partner Gregory Husisian was also featured in multiple news outlets that included Bloomberg and Law360 discussing recent developments in the initial phase of processing and distributing IEEPA tariff refunds.

• Top U.S. and EU trade negotiators are expected to meet this week in response to President Trump’s threat on May 1 to raise U.S. import tariffs on European cars to 25% from 15%.
• Certain Canadian and Mexican steel and aluminum producers that establish new U.S. domestic production capacity commitments for “key products” can apply to have the 50% U.S. import tariff on the metals temporarily reduced to 25%, according to an April 23 notice from the U.S. Department of Commerce and a report by Law360. Mexico Business News stated the adjustment “applies to companies that supply, directly or indirectly, U.S. automobile or medium- and heavy-duty vehicle manufacturers.”

• U.S. Trade Representative Jamieson Greer informed Mexican business leaders the renegotiation of the U.S.-Mexico-Canada Agreement (USMCA) will not result in the elimination of U.S. import tariffs on automobiles, auto parts, steel, and aluminum. Mexico will begin its bilateral negotiating round with the U.S. the week of May 25, 2026 in Mexico City.

• Canadian trade officials expressed the need for “some mutuality” from the U.S. in recognition of “significant” concessions made to address certain trade concerns of the Trump administration, as well as relief from U.S. sectoral tariffs on automobiles, steel, and aluminum. At the time of this newsletter publication, bilateral negotiations between the U.S. and Canada have not been announced.

• Last week the Office of the United States Trade Representative (USTR) began public hearings pertaining to Section 301 investigations into dozens of nations regarding unfair trade practices and forced labor. The outcome of the investigations could result in new and more durable levies that help to replace IEEPA tariffs invalidated by the U.S. Supreme Court.

• U.S. new light-vehicle sales are projected to reach a SAAR of 16 million units in April 2026, representing a decline of 7.3% year-over-year, according to a joint forecast from JD Power and GlobalData. The analysis notes that year-over-year comparisons remain challenging, as April 2025 results were impacted by consumers’ “tariff‑driven rush to retail lots.”

• The auto industry faces tight aluminum supplies and sharply higher prices due to the Iran war, U.S. import tariffs, and a major supplier outage, according to a report in The Wall Street Journal.
• Certain Toyota suppliers in Japan have warned that supply disruptions caused by the Iran war could halt vehicle production “within weeks” due to material shortages that include aluminum, resin and naphtha.

• Global average air-cargo spot rates have increased by 40% in the eight weeks after the start of the Iran war, according to WorldACD. Reduced exports of jet fuel have lowered supplies in California, and Europeand Asiaare at-risk for potential jet fuel shortages by the end of May amid ongoing shipping instability in the Strait of Hormuz.

• The California Department of Motor Vehicles announced updated autonomous vehicle regulations that include permitting criteria, new authority for law enforcement to issue citations, and guidelines for the testing and deployment of heavy-duty autonomous vehicles on certain public roads.

OEMs/SUPPLIERS

• The Q1 2026 Automotive News Auto Industry Confidence Index revealed growing pessimism among surveyed suppliers and automakers, due to mounting concerns that included consumer demand, tariffs, and elevated input costs.
• The Detroit 3 automakers collectively expect to receive over $2 billion in IEEPA-based tariff refunds.

• The Wall Street Journal reported foreign carmakers may pull low-cost vehicle models from the U.S. market due to profit losses attributed to import tariffs and higher operating costs.
• Certain automakers are reported to be considering adding sedans to their model lineup, amid increased consumer interest in lower-cost vehicles.

• Forvia agreed to sell its automotive interiors business to Apollo Global Management in a deal valuing the unit at about $2.13 billion.
• Toyota reported record global sales of 10.4 million vehicles in fiscal 2025, and its U.S. sales rose 7.7% YOY to 2.5 million units.

• GM will invest approximately $1.3 billion across its existing plants in Michigan, Ohio, and Ontario to support increased production of gas-powered trucks and SUVs. The automaker is reported to have indefinitely paused its full-size electric truck program.
• To support its turnaround strategy, Stellantis plans to prioritize resources and investment to four core brands: Jeep, Ram, Peugeot, and Fiat.

• Honda may extend the life cycles of certain high-volume gasoline models to mitigate the impact of $15.8 billion in EV-related impairments.
• A newly launched Canadian automotive industry association, the Pacific Manufacturing Association of Canada, will initially focus on the review of the USMCA. The association will represent Toyota and Honda, which collectively assembled approximately 77% of vehicles made in Canada in 2025.

• Ford recently had discussions with Chinese automaker Zhejiang Geely Holding Group regarding a potential partnership in Europe, according to a report in The Wall Street Journal. CEO Jim Farley recently indicated that Ford intends to expand partnerships with Chinese manufacturers in markets outside the U.S. to improve its competitive position. Along with BYD, Geely is often ranked among China’s top domestic automakers due to its growing momentum in competing across a wider variety of powertrains.

Autonomous technologies and vehicle software

• Software-defined vehicles (SDVs) may expose the automotive supply chain to higher cost pressures, according to predictions from Moody’s.
• Autonomous vehicle startups raised a record $21.4 billion across 34 deals globally between January 1 – April 15, 2026, according to data from Crunchbase. The bulk of the funding was captured by Waymo, Shield AI, and Wayve. This compares to $5.9 billion raised across 99 investments globally in all of 2025, and $12.1 billion raised across 127 deals in 2024.
• Automotive News provided an update on certain automakers’ approaches to implementing in-car AI-based assistants.
• The Wall Street Journal provided an overview of the current operations and expansion plans of robotaxi companies in the U.S.
• As autonomous vehicles expand across major cities in Texas, certain local officials have called for stricter oversight. A statewide framework taking effect May 28, 2026 will require robotaxi companies to maintain active authorization from the Texas Department of Motor Vehicles.
• EV maker Lucid Group secured $750 million in new funding that will help support its commercial robotaxi service that it plans to launch in the San Francisco Bay Area later this year. This follows Lucid’s announcement earlier this year of a jointly developed “global robotaxi” project with Uber and autonomous technology developer Nuro.
• BMW and Mercedes-Benz are pausing development of Level 3, or “eyes-off,” autonomous driving systems in Europe due to challenges that include development costs. The automakers plan to focus instead on developing advanced driver assistance systems (ADAS).

MARKET TRENDS AND REGULATORY

• Ransomware attacks in the auto industry more than doubled in 2025, according to data from cybersecurity company Halcyon featured in WardsAuto.
• A bipartisan U.S. Senate bill, the Connected Vehicle Security Act of 2026, would ban from the U.S market the “importation, integration, manufacture, sale, and resale of connected vehicles, software, and hardware linked to China or other foreign adversaries.” The bill’s sponsors, Sens. Bernie Moreno (R-Ohio) and Elissa Slotkin (D‑Mich), referenced the importance of codifying related rules from the Commerce Department into law.
• In an April 28 letter, U.S. House lawmakers urged the Trump administration to prohibit Chinese vehicles manufactured and titled in Canada and Mexico from entering the U.S. Chinese automakers collectively had an estimated 11% market share in Mexico as of Q1 2026, and their combined first-quarter sales were up 25% YOY. Canada recently announced plans to open its market to limited volumes of imported Chinese-built EVs at a reduced 6.1% tariff.
• AlixPartners predicts Chinese automakers will nearly triple overseas production to 3.4 million vehicles by 2030, “with Europe and Latin America emerging as a key battleground.”
• BYD is reported to be in discussions to join the European Automobile Manufacturer’s Association (ACEA). The Chinese EV maker expects to begin production in the second quarter of this year at its first European plant in Hungary.
• An estimated 30% of U.S. car buyers who traded in vehicles in the first quarter of 2026 had negative equity, and the average amount of negative equity carried on a vehicle has risen by over 40% since 2021.

HYBRID AND Electric Vehicles

• Tesla reported $22.4 billion in revenue for Q1 2026, up 16% from the first quarter of last year. The company stated its 2026 capital expenditures will exceed $25 billion – compared to $8.5 billion in 2025 – to support production of Optimus humanoid robots, AI initiatives, and the autonomous Cybercab.
• Samsung SDI announced a multi-year agreement to supply Mercedes-Benz with high-energy, nickel manganese cobalt batteries for its future EVs.
• Nissan announced it successfully tested a prototype all-solid-state EV battery pack, in support of a goal to begin production in fiscal 2028.
• China’s Contemporary Amperex Technology (CATL) announced its third-generation Shenxing lithium iron phosphate (LFP) EV battery can be charged from 10% to nearly full in just under seven minutes.
• Rivian Automotive announced plans to increase initial production capacity by 50% at its future plant in Georgia.
• The assets of failed EV truck startup Bollinger Motors are scheduled to be sold at a court-ordered online webcast auction on May 13.