Foley Automotive Update

Analysisby Julie Dautermann, Competitive Intelligence AnalystFoley 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's2025 Auto Trends Series,Driving the Future: Innovations, Regulations, and Strategies, will deliver actionable insights on critical topics, including regulatory changes, resilient supply chains, global competition, connected vehicle data, and talent strategies.Subscribehereto receive updates when new articles in this series are published.
• U.S. new light-vehicle sales in November 2025are projected to decline 5.2% year-over-year for a SAAR of 15.4 million units, according to ajoint forecast from J.D. Power and GlobalData.
• New vehicle inventory reached 2.97 million units at the start of November for an 88 days' supply industrywide, according toanalysis from Cox Automotive. This represents a 2.9% increase since the end of September, but a decline of 3.8% compared to November 2024.
• A number of automakers areurging major suppliers to find permanent alternatives to Chinese semiconductorsin response to themicrochip supply disruption involving Chinese-owned, Netherlands-based Nexperia.
• The Nexperiasupply disruption serves as "a warning shot for global supply chains,"and dependence on China for certain raw materials and technology is likely to increase risk for global automakers, according to commentary fromMoody's andGartner.
• GM directed a number of its suppliers to eliminatethe use of China-sourced parts by 2027, according to unnamed sources inReuters.
• Automakers and suppliers are increasinglyshifting away from global just-in-time supply chains to prioritize "regional supply chain resiliency."
• On November 18, the National Association of Manufacturers (NAM) provided an assessment of recent trade developments that included framework agreements with four Latin American countries, a deal with Switzerland, updates on China's rare earth export controls, and a new White House fact sheet pertaining to the U.S.-Korea deal.
• The Wall Street Journal reports China is considering implementing a "validated end-user"system for certain rare earth exports, and this "could make importing certain Chinese materials more difficult" for U.S. companies that have both civilian and defense clients. Chinadominates the processing of rare earth elements globally.
• Mexican President Claudia Sheinbaum's plan to impose higher tariffs on certain Chinese imports has beendelayed until at least December amid ongoing congressional debate.
• The NAM submitted commentary to the Office of the U.S. Trade Representative concerning practical steps to strengthen the United States–Mexico–Canada Agreement (USMCA). In addition, NAM Vice President of International Policy Andrea Durkin plans to testify during the USTR'spublic hearing December 3-5, 2025 regarding the operation of the USMCA.

OEMs/SUPPLIERS

• Areport published by MEMA Original Equipment Suppliers and consultancy Arthur D. Little includes an assessment of U.S. reshoring constraints and opportunities by auto parts category. The report also notes: "Labor remains the most visible pressure point, as higher wages (including benefits), limited availability, and persistent skills gaps raise costs relative to offshore peers. Automation offers a potential offset, but adoption below Tier 1 is constrained by high up-front investment requirements and limited integrator support."
• Crain's Detroit reports automotive content at the Consumer Electronics Show in January is likely to emphasize products with near-term market applications over futuristic unproven technologies. The article also noted that certain major suppliers intend to skip CES 2026 amid efforts to reduce costs and maintain profitability.
• Toyota CEO Koji Satoprovided insights into how the company has achieved record sales and production despite tariffs and market uncertainty.
• Honda reported its operating profit fell by 41% YOY for the six months ended September 30, 2025, and the automaker reduced its fiscal 2026 operating profit forecast by 21% due toexpenses related to EVs, semiconductor shortages, and U.S. tariffs.Honda recorded 237.3 billion yen ($1.5 billion) in EV-related losses and expensesduring the first half of its current fiscal year.
• Ford became the second automaker after Hyundai to allowdealers to sell certified pre-owned vehicles through the Amazon Autos site in certain U.S. markets.

MARKET TRENDS AND REGULATORY

• The CEOs of the Detroit 3 were invited to participate in aJanuary 14, 2026 hearing before the U.S. Senate Committee on Commerce, Science and Transportation to discuss topics related to regulation and vehicle affordability.
• The benchmark price for aluminum delivered to the U.S.recently hit a record high due to the impact of reduced inventoriesand import tariffs.
• New-vehicle purchasing decisions were impacted by tariffs for 36% of consumers, according to theJ.D. Power 2025 U.S. Sales Satisfaction Index (SSI) Study.
• The U.S.-China Economic and Security Review Commission'sannual report to Congress warned China could exploit U.S. reliance on its supply chains, and noted that China "now possesses a hyper-charged, state-directed manufacturing base without historic parallel." The report also urged policymakers to require industry disclosure of vulnerabilities to Chinese supply chains to better assess risk.

Autonomous Technologies and VehicleSoftware

• Waymoexpanded its robotaxi service to highways in parts of San Francisco, Los Angeles, and Phoenix.
• Teslareceived a permit to operate ride-hailing services in parts of Arizona with a human safety monitor in the vehicle. The company also operates a ride-hailing pilot program in parts of Austin, Texas, with human safety drivers on board.
• Amazon's Zoox now offers free autonomous rides in parts of San Francisco as part of itsearly rider initiative, Zoox Explorer.
• AtWeb Summit 2025 in Lisbon, Uber's Chief Operating Officer discussed the opportunities and challenges associated with profitably commercializing autonomous vehicles.Developing software that supports safe autonomous driving was described as a problem that is "almost largely solved." Challenges to commercialization include vehicle hardware costs, variable demand, and the inability of autonomous vehicles to respond to certain driving conditions.
• Swedish autonomous truck company Einride plans to go public in aSPAC deal that is expected to raise $219 million. The company is seeking an additional $100 million of private investment in public equity to support growth.

HYBRID AND Electric Vehicles

• New EV sales in October 2025 wereestimated at 74,835 units in the U.S., representing a decline of 30% year-over-year.
• Toyotaplans to invest $912 million to increase the output of hybrid vehicles and components across five states, as part of a broader $10 billion investment over the next five years to support U.S. production. Toyota'snewly opened $14 billion battery plant in Liberty, North Carolina supplies batteries for the automaker's hybrid models.
• Tesla intends to accelerate a strategy to reduce the use of China-made components in U.S.-manufactured vehicles, according to a report inThe Wall Street Journal.
• Ford isreported to be evaluating whether to permanently end production of the electric F-150 Lightning pickup truck due to profit losses and changing market conditions.
• Volkswagen and Rivian areconsidering selling EV technology developed by their joint venture to other automakers that could be used across a variety of powertrains. Separately, Volkswagen's electric vehicle brand Scout Motorsplans to establish its U.S. headquarters in Charlotte, NC.
• BYDestablished a goal to sell up to 1.6 million vehicles outside of China in 2026.
• Battery recycler Redwood Materials hasbegun operations at a $3.5 billion factory in South Carolina that will supply critical minerals for domestic supply chains. The company's Nevada Campus produced more than 60,000 metric tons of materials last year.
• Canadian EV battery recycling startup Lithion Technologiesfiled for creditor protection.

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