Foley Automotive Update

Key Legal Insights from Foley's Automotive Team

Analysis by Julie Dautermann, Competitive Intelligence Analyst

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Key developments

• Foley & Lardner partners Vanessa Miller and Nicholas Ellis are quoted in the Law360 article, Transportation Regulation & Legislation To Watch in 2026.

• U.S. 2025 new light-vehicle sales reached approximately 16.3 million units, up2% year-over-year, with sales attributed to the spending power of higher-income consumers. Households earning more than $150,000 annually accounted for 43% of the new cars sold last year, up from 30% in 2019. Households earning less than $75,000 comprised 26% of 2025 sales, down from 37% in 2019.

• Full-year 2025 auto sales increased 8% YOY for Toyota, 8% for Hyundai, 6% for Ford, 6% for GM, 0.5% for Honda, and 0.2% for Nissan. Sales declined 13% for Volkswagen, 3.6% for Subaru, 3.3% for Mazda, and 3% for Stellantis.

• Fourth-quarter 2025 vehicle sales declined for a number of automakers, signaling potential market challenges heading into 2026. Q4 2025 sales fell 20% YOY for Volkswagen, 9.5% for Honda, 7% for GM, 3.7% for Nissan, and 1% for Hyundai. Q4 2025 sales increased 9.3% YOY for Toyota, 4% for Stellantis, and 2.7% for Ford.

• U.S. 2026 new light-vehicle sales are projected to range from 15.8 million units to 16.1 million units. Cox Automotive suggested that "a high 15 million level may be the new norm for the industry" due to factors that include high new-vehicle prices.

• Canadian Prime Minister Mark Carney does not expect to pursue separate, near-term deals with the Trump administration to lower sector-specific tariffs, indicating negotiations would instead be part of this year's review of the U.S.–Mexico–Canada Agreement (USMCA). Canada intends to begin formal USMCA discussions with the U.S. later this month.

• "Fragmented ownership of trade-related data is increasingly a risk" for supply chain executives, according to commentary from consultancy Alvarez & Marsal on the upcoming USMCA review and U.S. trade policy featured in Mexico Business News.

• The U.S. Trade Representative postponed imposing new tariffs on Chinese semiconductor imports until June 23, 2027, after affirming that China's "acts, policies, and practices are actionable under Section 301 of the Trade Act of 1974."

• PwC's key themes for automotive M&A in 2026 include supplier consolidation in response to "rising costs and subdued end-market demand," as well as prioritization to "divesting non-core assets and investing in digital ecosystems."

OEMs/SUPPLIERS

• Announcements during CES 2026 held this week in Las Vegas included:
• Bosch plans to invest $2.9 billion in artificial intelligence technologies by the end of 2027. The supplier also announced new AI-based driver-assist systems, a partnership with Kodiak AI to develop platforms for autonomous trucks, and an expanded collaboration with Microsoft to use AI to optimize factory production.
• BMW plans to launch in-vehicle AI assistant technology developed in collaboration with Amazon.
• Mercedes' MBUX infotainment system will integrate AI from both Microsoft and Google.
• NVIDIA announced a group of AI platforms and models designed to enhance the development of autonomous vehicles.
• Companies including AMD and HERE Technologies announced new capabilities to enhance the development of software-defined vehicles (SDVs).
• ZF, Google, and Stellantis partner Leapmotor are among the companies that are increasing their adoption of Qualcomm's chip platforms to support SDVs.
• Ford will launch an eyes-off, hands-free driving system in 2028, beginning with a $30,000 all-electric vehicle that will be produced on the automaker's "Universal EV Platform."
• Lucid Motors, Uber, and Nuro revealed their jointly developed Gravity SUV robotaxi purpose-built for Uber's ride-hailing network.
• Hyundai plans to begin deploying humanoid robots at its manufacturing plant in Georgia in 2028.

• HARMAN International announced plans to acquire ZF Friedrichshafen's advanced driver-assistance systems business for $1.76 billion.
• Gartner's 2026 Top Trends for Automotive CIOs emphasized the importance of agility and adaptability, instead of reliance on scale, to mitigate the effects of ongoing market volatility.
• Hyundai expects geopolitical uncertainty and broadening technology adoption gaps to impact automaker profitability and intensify industry competition in 2026. Hyundai intends to sell 4.16 million vehicles globally this year, following 2025 sales of 4.14 million vehicles.
• Automotive News provided an update on the brands expected to participate during the January 14-25, 2026 Detroit Auto Show.
• On January 5, Honda announced it will extend a production shutdown at three Chinese factories for two more weeks due to a semiconductor shortage.

MARKET TRENDS AND REGULATORY

• The Internal Revenue Service released proposed rules for auto loan interest deduction established by the "One Big Beautiful Bill Act." The provision will allow borrowers to deduct up to $10,000 annually in interest on new vehicles for personal use if applicants meet certain criteria and the model's "final assembly" was in the U.S.
• A January 14, 2026 U.S. Senate committee hearing on vehicle regulation and affordability that was to feature the Detroit 3 CEOs was postponed after Ford CEO Jim Farley raised concerns related to scope and timing.
• China is still restricting U.S. exports of certain rare earth elements that are required as inputs to produce permanent magnets and other products, according to unnamed industry and government officials quoted in Bloomberg.

Autonomous Technologies and Vehicle Software

• Amazon Web Services and automotive technology supplier and Continental spin-off AUMOVIO will use generative AI to facilitate the development process for autonomous vehicles, beginning with Aurora's self-driving trucks.
• WardsAuto created a list of some of the most significant software-related vehicle recalls of 2025.
• Autonomous driving company Mobileye will acquire AI-powered humanoid robotics startup Mentee Robotics for $900 million.
• Mercedes will debut its advanced driver assistance system (ADAS), MB.Drive Assist Pro, in the U.S. later this year. The system is considered Level 2 autonomy, defined by the Society of Automotive Engineers (SAE) as technologies requiring constant human supervision when the features are engaged. The automaker already offers a Level 3 autonomous system – MB Drive Pilot – in select markets for operation on limited-access highways.
• McKinsey analysis predicts that vehicles equipped with Level 2 ADAS could comprise over 50% of global vehicle sales by 2030. Vehicles with Level 3 autonomous driving technology could represent 16% of global vehicle sales by 2035, compared with less than 1% in 2025.
• Challenges impacting the rollout of SDVs include software development complexities, regulatory pressures, and hardware constraints.
• Business Insider provided an overview of Rivian's plans to shift from SDVs to "AI-defined vehicles."
• Gartner recently predicted that only 5% of automakers will maintain strong AI investment growth by 2029, compared to over 95% today, noting the "automotive sector is currently experiencing a period of AI euphoria, where many companies want to achieve disruptive value even before building strong AI foundations." Gartner also stated that companies with "strong software foundations, tech-savvy leadership, and a consistent very long-term focus on AI will pull ahead from the rest, creating a competitive AI divide."

HYBRID AND Electric Vehicles

• U.S. 2025 sales of battery-electric vehicles (BEVs) are estimated to have declined 2.1% YOY to 1.27 million units.
• The percentage of light-vehicle models available with hybrid technology in the U.S. has roughly doubled since 2020.
• Tesla sold 1.64 million battery-powered EVs worldwide in 2025.
• BYD sold 2.26 million battery-electric vehicles and 2.29 million plug-in hybrid EVs globally in 2025.
• Honda will acquire LG Energy Solution's stake and related assets from the companies' Ohio EV battery joint venture plant for $2.9 billion.
• China's Xiaomi plans to sell 550,000 EVs globally in 2026, up from 410,000 in 2025.
• Volkswagen of America will not produce the ID.Buzz electric minivan for the 2026 model year in the U.S., citing low sales volumes and the impact of tariffs.

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