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

• Vanessa Miller, Foley & Lardner partner and the chair of the national automotive team, co-authored the Law360 article, Navigating Battery Validation Risk in the EV Supply Chain.

• Foley & Lardner assessed the compliance ramifications stemming from the U.S. Department of Justice’s first-ever antitrust whistleblower award.

• Elevated costs and financial distress could lead to significant supplier consolidation in 2026, according to a report in Automotive News.

• U.S. 2026 new light-vehicle sales are projected to reach 16 million to 16.2 million units, according to forecasts from Edmunds and GlobalData, respectively, shared at the Federal Reserve Bank of Chicago’s 32^nd Annual Automotive Insights Symposium.

• Predictions at the 2026 NADA Show suggest new-vehicle sales will not return to the 17 million level “for years,” due to vehicle affordability concerns among less-affluent consumers.

• A number of automakers urged the U.S. Trade Representative to simplify compliance with the U.S.-Mexico-Canada Agreement (USMCA), while consistently maintaining large parts of the agreement, according to excerpted commentary from a public docket concerning the operation of the USMCA with respect to trade in automotive goods.

• Prime Minister Mark Carney expects a “robust review” of the USMCA, noting that President Trump’s recent threat to impose 100% tariffs on Canadian goods likely signifies “prepositioning ahead of negotiations.” The president’s threat followed Canada’s agreement to allow tens of thousands of Chinese EVs into the Canadian market annually at a 6.1% tariff.

• The Commerce Department issued a notice outlining submission procedures for importers of medium- and heavy-duty trucks to qualify for preferential tariffs under the USMCA.

• Three months have passed since the U.S. Supreme Court heard oral arguments regarding the legality of the Trump administration’s tariffs as imposed under the International Emergency Economic Powers Act (IEEPA). Commentary in Bloomberg Law and CNN indicates the justices are in recess, and “next scheduled to take the bench and possibly issue opinions on February 20.” While the recess could be interrupted if a decision was reached, this would be considered “highly unusual.”  

• In a January 29 executive order, President Trump threatened to impose IEEPA-based tariffs on imports from any nation that sells oil to Cuba.

• President Trump threatened in a social media post to raise tariffs on South Korea to 25% from 15%, citing that the nation has not moved fast enough to implement a trade agreement reached last year.

• In a social media post, President Trump announced a framework agreement to lower tariffs on India to 18%, from the current rate of 25%.
• The National Highway Traffic Safety Administration announced a notice for public comment on potential requirements within federal safety standards “that no longer serve a functional safety purpose” and “act as barriers to the deployment of new technologies.” The comment period expires March 24, 2026.

• NHTSA is preparing to roll back fuel economy standards for heavy-duty pickup trucks and vans. This follows a proposed rule issued by the agency in December 2025 to reset standards for passenger cars and light trucks.

OEMs/SUPPLIERS  

• Toyota maintained its position as the top global automaker in 2025, with sales inclusive of all subsidiaries up 4.6% year-over-year to a record 11.3 million units. Toyota and Lexus brand vehicle sales within the U.S. increased 8% YOY in 2025.

• GM reported its 2025 net income declined 55% YOY to $2.7 billion, and revenue fell 1.3% YOY to $185 billion. The automaker’s 2026 projected net income ranges from $10.3 billion to $11.7 billion.

• Hyundai reported its net profit fell 22% YOY in 2025, despite achieving a 6.3% YOY revenue increase. The automaker attributed the profit decline to the impact of U.S. import tariffs and higher sales incentives amid intensified competition. Last year Hyundai-Kia ranked fourth in U.S. new light-vehicle sales, behind GM, Toyota, and Ford. 

• Detroit-based American Axle & Manufacturing Holdings, Inc. changed its name to Dauch Corporation effective January 26, and began trading on the NYSE under ticker symbol “DCH.” 

• Electrical equipment maker Eaton expects to complete a spin-off of its vehicle and eMobility units by March 2027, as part of a strategy to focus on higher growth and higher margin businesses.

• Nissan has a goal to reach 1 million vehicle sales in the U.S. by 2027.

• The Michigan Strategic Fund approved a $4 million grant to Volkswagen to support the retention of 909 jobs, amid efforts by the automaker to consolidate operations for certain technical activities in the state. Separately, VW paused plans for a new Audi factory in the U.S. due to market challenges that include the impact of tariffs.

• The Canadian government indicated it will take steps to recover “hundreds of millions of dollars” from GM and Stellantis for reducing production in the country. Most recently, GM moved forward with a previously announced plan to eliminate the third shift at its Oshawa Assembly plant in Ontario. The plant produces light- and heavy-duty Chevrolet Silverado pickup trucks.

• Stellantis will require all U.S. employees to be in the office five days a week by the end of March.

MARKET TRENDS AND REGULATORY

• The Environmental Protection Agency determined that a California regulation applying heavy-duty emissions inspection and maintenance requirements to out-of-state trucks is unlawful and will not count toward the state’s emissions reduction targets. The California Air Resources Board (CARB) stated it will continue enforcing the Clean Truck Check program, and claimed the EPA “has no authority” over the initiative.
• In a brief recently filed in a California federal court, a number of heavy-duty truck manufacturers argued that CARB has continued to pursue emissions rules and requirements that are preempted by federal law, in spite of a partial preliminary injunction.
• After 10 crashes resulted in serious injury or death attributed to “substandard and dangerous” replacement air bag inflators, NHTSA issued an urgent warning to used car buyers and owners to understand their vehicles’ maintenance history. The agency indicated the air bag inflators are likely to be illegally imported.
• Minivan sales rose 21% YOY in 2025 in the U.S. to 393,812 units, according to data from Edmunds.
• Chinese-made vehicles accounted for nearly 20% of total new car sales in Mexico in 2025. Mexico recently imposed new tariffs of up to 50% on more than 1,400 products – including finished passenger vehicles and certain auto parts – imported from China and other nations with which it does not have a free trade agreement.
• BYD has a goal to increase vehicle sales outside of China by 24% to 1.3 million units in 2026.
• Under rules scheduled to take effect in 2027, China will ban retractable door handles on vehicles and require both internal and external door handles that can be mechanically opened.
• New-car registrations in Europe increased 1.8 % YOY in 2025, according to data from the European Automobile Manufacturers’ Association (ACEA). The combined market share of petrol and diesel cars dropped to 35.5%, down from 45.2% in 2024. Hybrid-electric vehicles accounted for 34.5% of the EU market in 2025, and battery-electric vehicles accounted for 17.4%.

Autonomous Technologies and Vehicle Software

• Software complexity has caused certain automakers to rethink the prioritization of in-house software development to instead increase their pursuit of software-related strategic alliances.
• The U.S. Senate Committee on Commerce, Science, and Transportation heard testimony this week from auto industry executives who emphasized the need for a federal framework to support autonomous vehicle development and deployment.
• Volkswagen subsidiary Traton will invest up to $25 million in PlusAI’s SuperDrive self-driving software in an expanded partnership to accelerate commercialization of autonomous, on-highway trucking in the U.S. and Europe. 
• Mountain View, CA-based startup Gatik announced it secured $600 million in contracted revenue through 2030 to transport goods in Level 4 driverless trucks between distribution centers and certain Fortune 50 retailers’ stores. Gatik’s autonomous technology is integrated in Isuzu’s medium-duty platform and operates in parts of Texas, Arkansas, Arizona, Nebraska, and Ontario.
• Toronto-based autonomous trucking developer Waabi raised $750 million of Series C venture funding to develop the AI technology that powers self-driving trucks and robotaxis. In addition to the funding round, Uber committed to invest up to $250 million in Waabi to deploy robotaxis on the ride-hailing company’s platform.

HYBRID AND Electric Vehicles

• CEO Elon Musk announced Tesla will end production of its Model S sedan and Model X SUV later this year, to prioritize AI, autonomy, and producing humanoid robots at its Fremont, CA plant.
• Nine models in Consumer Reports’ 2026 list of the top ten best new vehicles are hybrids.
• Toyota Motor Manufacturing Canada started producing the all-hybrid 2026 RAV4 in Ontario following a $1.1 billion investment to support the next-generation program.