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

• President Trump reversed course from a threat to impose tariffs on European nations that oppose his efforts to acquire Greenland, amid the pursuit of a “framework of a future deal.”

• During last week’s visit to the Ford Rouge Center in Dearborn, MI, President Trump suggested the United States-Mexico-Canada Agreement (USMCA) is “irrelevant” and of “no real advantage” to the U.S.

• Canada reached an agreement that will allow up to 49,000 Chinese EVs into the Canadian market each year at a 6.1% tariff. The import limit is scheduled to increase to up to 70,000 EVs annually within five years.

• U.S. Commerce Secretary Howard Lutnick described Prime Minister Mark Carney’s efforts to strengthen trade relations with China as “political noise,” and implied that Canada’s recently announced trade agreements could impact USMCA negotiations. Amid heightened tensions between the U.S. and Canada, Mexican President Claudia Sheinbaum emphasized her commitment to preserving the USMCA.

• In remarks at a January 13 meeting of the Detroit Economic Club, President Trump repeated his openness to allowing Chinese automakers to establish U.S. factories. Following the remarks, the Alliance for Automotive Innovation restated its position that the availability of cheap Chinese autos in the American market “could end up being an extinction-level event for the U.S. auto sector.” 

• U.S. total new light-vehicle sales in January 2026 are projected to decline 2.7% year-over-year to a SAAR of 15.0 million units, according to a joint forecast from J.D. Power and GlobalData. 
• U.S. new light-vehicle inventory totaled 2.8 million units at the start of January 2026, representing a 76 days’ supply industrywide, according to analysis from Cox Automotive. This is a 4.8% decline from the same period last year.

• Kelley Blue Book data indicates the new-vehicle average transaction price (ATP) rose 0.8% YOY to a record $50,326 in December 2025, and the average new-vehicle manufacturer’s suggested retail price (MSRP) rose 1.2% YOY to a record at $52,627.  The average incentive package in December was 7.5% of ATP, compared to 7.9% of ATP in the same period last year. The analysis also noted that new vehicle prices “typically peak in December.”

• The Commerce Department announced a new trade deal that will limit the U.S. “reciprocal” tariff rate on Taiwanese goods to no more than 15%. As part of the agreement, Taiwan will invest $250 billion in U.S. chip production capacity.

• On January 15, President Trump imposed a 25% Section 232 tariff on specific categories of advanced computing chips and derivative products. Automotive Logistics and guidance issued by the U.S. Customs & Border Protection indicate automotive applications are exempt from this 25% duty.

OEMs/SUPPLIERS  

• The most recent Automotive News Confidence Index found that suppliers were “notably more negative” about the overall financial health of the industry than automakers and dealerships.
• Automotive News provided a list of brands that reached U.S. sales records in 2025.

• GM plans to move production of the Buick Envision compact SUV from China to its Fairfax Assembly plant in Kansas City, KS beginning in 2028.

• Bloomberg provided an update on the ongoing dispute in Dutch court over control of Chinese-owned Netherlands-based chipmaker Nexperia.

• BMW described how it is implementing artificial intelligence to improve resilience and mitigate supply chain risk. 

• Volkswagen outlined plans to achieve €1 billion ($1.1 billion) in cost savings by 2030.

• Reuters reported China’s Ningbo Xusheng Group recently secured a contract with an unnamed North American automaker that is reportedly worth an estimated $1.1 billion.

MARKET TRENDS AND REGULATORY

• At the 2026Detroit Auto Show and Washington D.C. Auto Show, Trump administration officials suggested that vehicle prices would become more affordable due to relaxed emissions rules and the end of EV sales incentives.
• The North American heavy-duty truck market is expected to have muted sales through at least the first half of 2026 as fleets delay equipment purchases due to uncertain business conditions, according to consulting firm McKinsey.
• U.S. Representative Robin Kelly (D-IL) introduced H.R.6947, the “SAFE Exit Act,” to require manual car door releases for all new vehicles, including inside and outside handles, to ensure immediate exit in the event of electrical failures or other issues.
• Total new-vehicle sales in China increased 3.9% YOY in 2025, according to estimates from the China Passenger Car Association. Chinese brands captured nearly two-thirds of the total new-vehicle market in China last year. China’s total vehicle exports rose 21% YOY and surpassed 7 million units in 2025.

Autonomous Technologies and Vehicle Software

• Tesla debuted its first public robotaxi rides without human safety monitors in the vehicles as part of a pilot program in Austin, Texas. Tesla launched public robotaxi rides with safety monitors in Austin in June 2025.
• Automakers including Ford and GM intend to prioritize Level 3 autonomy capabilities instead of developing fully autonomous robotaxis. Level 3, or “conditional automation,” is defined as an autonomous vehicle that can handle most aspects of driving under certain conditions, with the requirement for a human driver to take over when the system requests.

HYBRID AND Electric Vehicles

• Kelley Blue Book estimates EVs represented 7.8% of 2025 total U.S. new-vehicle sales, compared to 8.1% in 2024. The analysis noted that EV market share peaked at 10% in the third quarter of 2025, before dropping to 5.8% in the fourth quarter following the expiration of federal subsidies.
• EVs are projected to represent 6% to nearly 8% of 2026 U.S. new-vehicle sales according to forecasts from Edmunds and Cox Automotive, respectively.
• GM reported $6 billion in EV-related charges in the fourth quarter of 2025, of which $4.2 billion was attributed to “supplier commercial settlements, contract cancellation fees, and other charges.”  GM’s Q4 2025 EV costs were in addition to a $1.6 billion charge the automaker recorded in the third quarter of 2025 related to revised EV production plans.
• Stellantis canceled production of all plug‑in hybrid electric vehicle (PHEV) models in North America beginning with the 2026 model year. The automaker’s electrification strategy will instead prioritize conventional hybrids and range-extended EVs.

• Ford is considering a partnership to purchase batteries from China’s BYD for certain hybrid-vehicle models sold outside the U.S.

• California Governor Gavin Newsom proposed a new $200 million incentive program to support zero emission vehicle (ZEV) adoption in the state. ZEVs represented 18.9% of Q4 2025 total new-vehicle sales in California.

• A report in The Wall Street Journal assessed Chinese EV maker BYD’s top 10 passenger-vehicle markets outside of China.

• The European Commission released guidelines for Chinese EV exporters to avoid certain tariffs by complying with a minimum pricing system for Chinese-made EVs sold in the bloc.