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. 

AUTOMOTIVE KEY DEVELOPMENTS

• U.S. new-vehicle sales are expected reach a SAAR of 16.8 million units in August, according to preliminary estimates. Total vehicle sales in August are forecast to decline 5% year over year because August 2025 sales were inflated by the Labor Day holiday falling into the August reporting month last year, as well as consumers that accelerated EV purchases ahead of the expiration of federal tax credits. Average monthly payments are expected to increase 3.7% YOY to $812, while interest rates are projected to drop six basis points to 6.55%.

• Foley & Lardner represented autonomous trucking developer Gatik in its $200 million Series D financing, as well as the company’s partnership with PepsiCo. Gatik’s model is built around one of the most commercially compelling applications of autonomy: high-frequency regional routes that connect distribution centers and stores.

• Honda has reportedly asked suppliers to lower costs as it targets more than $9 billion in savings over the next four years to offset Chinese competition and EV-related losses.
• U.S. diesel supplies are at a record seasonal low, according to data released August 26 by the Energy Information Administration, and this could contribute to rising fuel prices in the coming weeks. Nationwide average diesel prices are currently more than 50% higher than one year ago.

• Chinese regulators have ordered surprise inspections of automakers, suppliers, and third-party testing labs amid concerns that rapid vehicle development cycles in the nation could compromise safety. The inspections will address areas that include durability, production consistency, and driver-assistance and artificial intelligence features.

TRADE/TARIFFS

• Auto industry leaders thus far largely view President Trump’s threat to impose 50% tariffs on autos and parts from Canada beginning in January 2027 as a negotiating tactic, according to commentary featured in Automotive News. This follows Canadian counter-tariffs on $20 billion worth of U.S. imports, including steel and aluminum, beginning September 8 in response to the Trump administration’s August 22 imposition of 50% tariffs on certain Canadian imports under Section 338 of the Tariff Act of 1930 after the breakdown in trade talks.
• Toyota and Honda face the greatest exposure to President Trump’s proposed 50% tariff on Canadian car imports, as they produce more than three-quarters of Canada’s vehicles.
• In a recent interview with POLITICO, U.S. Trade Representative Jamieson Greer indicated that trade talks with Canada remain suspended. Canadian officials see little chance of restarting trade negotiations with the Trump administration before the midterm elections, while cautioning the “situation remains fluid,” according to unnamed sources in Bloomberg.
• Despite the collapse of U.S.-Canada trade talks, Mexican President Claudia Sheinbaum expressed optimism for a trade deal with President Trump as her chief negotiator, Economy Minister Marcelo Ebrard, pursues goals that include lowering U.S. tariffs on Mexican steel, aluminum, and automobiles.
• U.S. Customs and Border Protection has delayed the launch of the Consolidated Administration and Processing of Entries (CAPE) Phase 3 – originally set for August 20 – until further notice. Phase 3 covers refunds of IEEPA duties on finally liquidated entries for importers that have filed protective actions at the Court of International Trade, a category CBP has estimated at roughly $11.4 billion. The status of CAPE Phases 1 and 2 are unaffected by this delay.
• CBP issued an Advance Notice of Proposed Rulemaking titled “Heightened Import Disclosures for Supply Chain Visibility” to improve visibility into the supply chains of goods imported into the U.S. The proposed effort is intended to “help CBP more effectively detect, stop, and prevent illicit imports that evade U.S. customs and trade laws.” Public comments must be received on or before December 1, 2026.
• The Department of Commerce announced triple-digit tariffs on van-type trailers and subassemblies imported from China after finalizing investigations that determined they are being sold at unfair prices. The Commerce Department set countervailing duties of 134.75%, while trailers are facing an antidumping duty of 130.86%. The Commerce Department is also investigating such trailers imported from Canada and Mexico, preliminarily finding that the goods from those countries are being sold at less than fair value.

OEMs/SUPPLIERS  

• The Wall Street Journal reports Toyota is closing in on GM’s sales lead in the U.S., as the American automaker prioritizes increasing profits while selling fewer vehicles.
• Nissan and Honda have agreed to jointly develop standardized electronic control units (ECUs) and software for certain next-generation software-defined vehicles (SDVs) beginning in fiscal year 2029.
• Honda suggested it may not build a new plant in North America if the United States-Mexico-Canada Agreement (USMCA) is not extended.
• Unifor members at GM Canada ratified a three-year collective bargaining agreement that will bring GMC Sierra heavy-duty pickup production to Oshawa Assembly and prevent the CAMI Assembly Plant from closing. Unifor began contract negotiations with Stellantis this week, amid concerns the automaker may sell the idled Brampton Assembly Plant.
• In the first seven months of 2026, Chinese automakers sold more vehicles in Europe than they did during all of 2025. Chinese brands could collectively produce up to one million vehicles annually in Europe by 2030.

AUTONOMOUS TECHNOLOGIES AND VEHICLE SOFTWARE

• Einride plans to add 500 Tesla Semis to its autonomous electric fleet over two years beginning in September, expanding its freight network across corridors in California, Texas, New Jersey, Illinois and Georgia.

MARKET TRENDS AND REGULATORY

• The National Highway Traffic Safety Administration opened an investigation into nearly one million GM pickups and SUVs based on complaints about engine failures. NHTSA is also expanding a separate investigation into GM’s “eBoost” electronic braking system after complaints that failures may cause a loss of braking and steering assist, potentially affecting more than 1.2 million vehicles.
• Consumer complaints to NHTSA about exploding or shattering sunroofs are on pace to reach a record high in 2026. The issue affects all major automakers, but regulators have attributed it largely to road debris rather than safety defects.
• The Department of Homeland Security and the Transportation Department are increasing scrutiny of immigrant truck drivers, including by requesting nationwide licensing data to assess driver certifications. The push could further constrain trucking capacity across the U.S., putting upward pressure on freight pricing.
• The transportation cost index in the August Logistics Managers’ Index rose 3.1 percentage points from July, marking the fourth increase in five months and signaling continued upward pressure on freight transport costs.
• Chinese automakers including Xpeng, BYD and Chery Automobile are among the companies that have recently increased their investments into humanoid robot development, betting that AI advances will eventually enable humanoids to be capable of learning nearly any task.
• China expects to build more than 100,000 humanoid robots this year, up from 20,000 in 2025. Analysis in Reuters reveals a “widening gap” between the Chinese government’s ambitions and humanoids’ capabilities, “resulting in a market where manufacturing capacity outpaces commercial demand, key players rely on subsidies and prices are falling.”

HYBRID AND ELECTRIC VEHICLES

• Hybrid market share is on track to increase 4.8 percentage points to 18.2% of U.S. new light-vehicle sales in August 2026, representing 35.5% YOY growth. U.S. battery EV market share is estimated at 7.2%.
• Stellantis plans to develop electrified Jeep models with Dongfeng Motor Group, using its Chinese partner’s technology and manufacturing capabilities, marking the American brand’s return to Chinese production after a four-year hiatus.