Foley Automotive Update

Analysisby 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 partner Vanessa Miller co-authored "Building AI-Ready Supply Chains: Structuring Data and Navigating Legal Frameworks in an Era of Intelligent Operations," found inAutomation Alley Integr87 2025 Playbook: Global Trends & Supply Chain: Planning for a Shifting World.
• Foley & Lardner's"Made in the USA: End-to-End Guide to Developing Your U.S. Manufacturing Footprint" series delves into the critical decisions U.S. manufacturers face as they rethink where and how they build. The most recent article in the series isWhere Should You Build? Labor Considerations in Siting and Expanding U.S. Operations. Subscribehere to receive updates when new articles in this series are published.
• Middle-market suppliers are "being hit especially hard" from ongoing market and trade policy volatility, according to commentary last week from Foley & Lardner partner Ann Marie Uetz during the Society of Automotive Analysts'Coffee Break: The Fast Lane Series – Automotive Update.
• An estimated 20% of automotive suppliers are in financial distress, according to recent surveys from MEMA, The Vehicle Suppliers Association and RapidRatings excerpted inAutomotive News.
• Foley & Lardnerpartner Gregory Husisian appeared in aSupplyChainBrain video interview to offer perspective on the U.S. Supreme Court's upcoming review of the legality of the Trump administration's tariffs as imposed under the International Emergency Economic Powers Act (IEEPA). The Supreme Courtexpects to hear oral arguments regarding the IEEPA tariffs on November 5, 2025.
• Foley & Lardner's"Tariffs and Your Contracts" series addresses how to assess and structure commercial contract provisions amid the recent widespread tariff changes. The final article in the series isTariffs and Your Contracts:Why does the contract quantity matter?
• The U.S. Housepassed a measure that largely blocks the ability of members to force a vote through March 2026 on the national emergency authority used as the basis for President Trump's tariffs.
• According to a Commerce Departmentnotice, stakeholders have until September 29, 2025 to comment on whether the government should include additional goods within the scope of the 50% steel and aluminum tariffs imposed by the Trump administration earlier this year. In a September 16letter, multiple trade groups, including the American Automotive Policy Council (AAPC)and MEMA,expressed concern over the possible expansion of the steel and aluminum levies, and urged the Trump administration to "eliminate further unpredictable expansions" of the tariffs.
• The Department of Commerce released anInterim Final Rule to establish procedures for the Section 232 automobile parts tariff inclusions process. Public comments must be received no later than November 3, 2025.
• The Office of the U.S. Trade Representative isseeking comments on the operation of the U.S.-Mexico-Canada Agreement (USMCA) in advance of next year's joint review of the regional trade agreement. Stakeholders have until November 3, 2025 to submit written comments and requests to appear at a public hearing scheduled for November 17, 2025.
• TheMexican governmentannounced plans to introduce tariffs of up to 50% on automobiles, auto parts, and other products made by China and other countries with which it does not have a free trade agreement. S&P Global Mobilityanalysis indicates Mexico is currently China's largest auto export market, accounting for roughly 8% of China's total auto exports in the first seven months of 2025. S&P also predicted the impact of the tariffs "will be material for suppliers with heavy export exposure to Mexico or suppliers that rely on imported components from Chinafor their local production facilities in Mexico."
• Trade negotiations between the U.S. and South Korea continue to experiencechallenges related to visa issues and automotive tariffs.

OEMs/Suppliers

• Clarity on automotive tariffs and U.S. trade policy is likely still "months away," according tocommentary at the Automotive News Congress conference in Detroit this month.
• GM willtemporarily lay off "the majority" of the 4,000 hourly workers at its Wentzville Assembly plantin Missouri from September 29 to October 19 due to an unspecified parts shortage. The plantproduces midsize pickup trucks and full-size vans.
• Hyundairaised its 2025 revenue forecast by two percentage points to a range of 5% to 6%, but lowered its projected operating profit one percentage point to a range of 6% to 7% due to the effects of import tariffs. The automakermaintained a goal for 80% of its vehicles sold in the U.S. market to be produced domestically by 2030.
• Learplans to establish an advanced manufacturing and innovation center in Rochester Hills, MI.
• Auburn Hills, Michigan-based Lucerne Internationalshelved plans to establish a $50 million aluminum forging plant in Detroit due to market challenges that include tariffs.
• Fordwill open a new world headquarters building this November at its reimagined product development campus in Dearborn, Michigan. The new site is twice the size of its current "Glass House" headquarters building.
• Stellantis hopes to strengthen its iconic Jeep brand, which experienced significant sales declines attributed to strategic missteps under former CEO Carlos Tavares, according to a report inBloomberg.
• Volkswagen unit Scout Motorsannounced plans to establish a $300 million supplier park in proximity to its plant inBlythewood, South Carolina.Separately, VWplans to raise prices on certain 2026 model year vehicles sold in the U.S. by up to 6.5% in response to tariffs.
• Continental spinoff Aumovio, a provider of sensors, displays and braking systems,debuted on the Frankfurt Stock Exchange at a market capitalization of approximately €3.5 billion.
• GM is using artificial intelligence and other technologies to help reduce risk and increase supply chain resilience, according tocommentary last week during the Center for Automotive Research (CAR) Management Briefing Seminars in Detroit.
• Jaguar Land Roverextended a production shutdown to October 1 due to the complexity of restoring operations following a September 3 cyberattack.The incident has also causedcertain European suppliers to pause or revise their own production.
• Fordplans to cut up to 5,000 employees in Europe by 2027, representing approximately 18% of its workforce in the region.

Market Trends and Regulatory

• New light-vehicle inventory reached 2.76 million units at the start of September for a 77 days' supply industrywide. This represents an increase of 4.1% since the beginning of August, but a decline of 3.9% compared to September 2024.
• Cox Automotive reported the average new auto loan rate reached 9.43% in September, amid "a decline in financing incentives, which is a function of tighter new vehicle supply." This represents an increase of 75 basis points (BPs) year-to-date, and a decrease of 14 BPs year-over-year.
• The National Highway Traffic Safety Administration (NHTSA)will delay changes to its five-star New Car Assessment Program until the 2027 model year after the Alliance for Automotive Innovation stated the previous timetable did not allow enough time to implement vehicle design changes.
• The U.S. Senate voted 51-47 toconfirm Jonathan Morrison to head NHTSA. Morrison, who previously served as NHTSA chief counsel during President Trump's first term, expressedplans to encourage innovation and modernize safety standards.
• In its first rate cut since December 2024, the Federal Reservelowered its benchmark lending rate 0.25 points to a range of 4% to 4.25%. The Fed's median expectation is for up to two additional rate cuts before the end of 2025, while noting there is elevated uncertainty about the economic outlook.
• The Chinese auto industry has experienced excess inventory and reduced profitability as China's domestic automakers prioritize "production targets influenced by government policy, instead of consumer demand," according to analysis fromReuters. China's government agenciesset the 2025 automobile sales targetat 32.3 million units,compared to a projection of 32.9 million units from the China Association of Automobile Manufacturers.

Autonomous Technologies and Vehicle Software

• A survey by consultancy Capgemini found that 87% of automotive organizations believe "software will be the single biggest source of competitive advantage over the next five years." In addition,92% of survey respondents agreed that "every automotive organization will evolve into a software company to support software-defined vehicles (SDV) and mobility services,"and 61% expect their software-defined strategy will impact over half of their brands within the next five years.
• Livonia, Michigan-basedRoush Industriesdelivered its first autonomous truckequipped with aKodiak Robotics driverless system toAtlas Energy Solutions in Texas.
• Alphabet's Waymowill partnerwith Lyft to launch robotaxi services in Nashville, TN next year. Separately, Waymo and Via Technologiesannounceda partnership to offer autonomous public transit rides in parts of Chandler, AZ.
• Nvidia isconsideringa $500 million investment in U.K.-based autonomous driving startup Wayve Technologies.

Hybrid and Electric Vehicles

• Nearly 58% of new U.S. EV customers leased their vehicles in Q2 2025, and EVs comprised just over 20% of all leased new vehicles in the second quarter, according toanalysis from Experian.
• In a reversal, California Governor Gavin Newsom said the state willnot offer EV purchase incentives to backfill a $7,500 federal tax credit that is set to expire at the end of this month.
• Stellantis canceled plans to produce anall-electric Ram pickup truck and aplug-in hybrid version of its Gladiator midsize truck due to slowing demand. The automaker intends to continue developing a hybrid Ram 1500 pickup that could debut in 2026.
• Nissancanceled plans to produce its 2026 model year Ariya EV for the U.S. market.
• Amazon isreportedly testing GM's BrightDrop electric vans in support of a goal to utilize 100,000 electric delivery vehicles by 2030. The automakerplans to resume BrightDrop production at its CAMI plant in Ontario, Canada this November.
• Chinese automakers have collectivelysurpassed a 50% market share in global EV sales.
• LG Energy Solutionannounced two multi-year EV battery supply agreements with Mercedes-Benz that are valued at an estimated $11 billion.
• Lithium-ion battery parts maker Entek Technologysold a majority stake to investment-firm I Squared Capital, which also plans to invest in the company's planned factory in Indiana. On September 17, the Department of Energyapproved an initial installment of $77 million to help finance the new facility in Terre Haute, representing the first disbursement of the up to $1.3 billion DOE loan.
• The Michigan Supreme Courtordered a lower court to reconsider a challenge to Ford's plans for a $2 billion EV battery plant in Marshall, Michigan that is scheduled to begin production next year.
• EV battery startup Our Next Energywill exit most of the factory space it leases in Michigan.
• Rivianbroke ground on a $5 billion EV plant in Georgia that is scheduled to open in 2028.

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