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

• Foley & Lardner attorneys Chanley Howell, Vanessa Miller, Leighton Allen, and R.J. McVeigh authored the SupplyChainBrain article, “AI BOMs: The New Cybersecurity Imperative for Supply Chain Leaders.”

• U.S. new light-vehicle sales are projected to reach a SAAR of 15.6 million in October, according to a joint forecast from JD Power and GlobalData.

• According to the third quarter Automotive News Auto Industry Confidence Index, auto suppliers and retailers are expressing less optimism compared to automakers, due to market challenges that include policy uncertainty and rising costs.

• GM reported its third quarter 2026 revenue rose 2.9% year-over-year to $50 billion, while net income surged 151% YOY to $3.3 billion, driven by fewer special restructuring and tariff charges compared to the prior year, strong pricing strategies, and record sales of highly profitable full-size pickup trucks. The automaker narrowed its profit outlook ranges for 2026to $14.5 billion to $15.5 billion, down from its prior projection of up to $16 billion, and warned of growing market headwinds in 2027. GM also approved a $20 billion stock buyback plan to prioritize shareholder returns and boost a stock price it considers undervalued.

• Stellantis reported its third quarter 2026 net revenue rose 1% YOY to €37.6 billion. The automaker reported€64 million in North American earnings compared with a €475 million loss in the same quarter last year.

• Ford reported third quarter 2026 revenue of $49.5 billion and net income of $2 billion, reflected YOY declines of 2% and 16.6%, respectively. The decline in net income was attributed to challenges that included escalating raw material costs and short-term production disruptions.

• Hyundai reported its third quarter 2026 retail sales declined in nearly all major global markets, except the U.S. and India, which had robust demand for Hyundai’s hybrid models and sport-utility vehicles. The automaker lowered its annual outlook due to headwinds that include slowing global demand, and intensifying competition from Chinese automakers.

• Nearly half of 775 senior auto executives surveyed by KPMG believe six of the world’s top 10 automakers will be headquartered in China by 2035. In addition, 51% of respondents expect software and digital technology to become their company’s main source of competitive differentiation by 2035.

• Eighty-three percent of surveyed automotive software developers expect software-defined vehicles (SDVs) to become a major cyberattack target within three years, according to a report from software supplier QNX. The survey also found that 75% of respondents said the lack of a common, reusable software foundation is slowing SDV development, while 62% expect AI to play a significant role in development workflows.

• If future administrations tighten fuel economy standards, certain vehicle reclassifications in the National Highway Traffic Safety Administration’s final CAFE rule could prompt automakers to increase their use of imported components or offshore production.

• According to The Wall Street Journal, the U.S. warned Gulf Arab nations of a possible “short, intense military campaign” against Iran after the U.S. midterm elections. An October 28 update from the U.S. Naval Forces Central Command advised ships to “remain well clear” of the Strait of Hormuz due to the potential for blockade enforcement actions.

TRADE/TARIFFS

• Progress toward a U.S.-Mexico trade deal reportedly stalled in recent days due to opposition from U.S. officials including Commerce Secretary Howard Lutnick to significant tariff reductions on Mexican steel and aluminum. This week Mexican Economy Minister Marcelo Ebrard told reporters there could be an update on a deal following the conclusion of the U.S. midterm elections.
• President Trump and members of his administration suggested that U.S.-Canada trade negotiations have “picked up” in recent days. This follows a modification to tariffs on Canadian goods that will exempt certain products that benefit the rural economy of Maine beginning on October 30, 2026. A senior Canadian government official told POLITICO that trade discussions with the U.S. remain informal.
• Canadian Prime Minister Mark Carney announced a C$9 billion joint action plan with Ontario to counteract the effects of U.S. import tariffs on the province’s auto and steel industries.

• U.S. steel prices rose to their highest level in more than four years as domestic pricing remained strong and import tariffs reduced foreign supplies. 

• President Trump’s 50% tariff has made aluminum up to 80% more expensive for U.S. manufacturers than it is for their overseas competitors. After years of declining domestic production capacity, the U.S. now typically imports nearly 70% of its aluminum from Canada.

• A new lawsuit was filed in the Court of International Trade to challenge President Trump’s authority to impose 50% tariffs on Canadian goods under Section 338 of the Tariff Act of 1930.

• The Office of the U.S. Trade Representative proposed extending a suspension of port fees on China-linked vessels and cargo-handling equipment for an additional two months, through January 9, 2027.

• President Trump instructed the USTR and Commerce Secretary to pursue negotiations with trading partners over robotics and industrial machinery to address national security concerns. The president requested an update on the negotiations within 180 days.

OEMs/SUPPLIERS  

• Bosch plans to split its automotive-parts business into a separate limited-liability company, Bosch Mobility, which will remain wholly owned by the Bosch Group. The company also intends to split its Bosch Digital, Global Business Services, and Global Real Estate operations by the end of 2027, turning the existing entity primarily into a holding company.
• Volkswagen’s Audi brand will invest $4 billion to establish its first U.S. factory in Macon, Georgia. The plant will produce up to 200,000 gas-powered vehicles and plug-in hybrids annually. 
• Toyota plans to earn $1.7 billion annually by selling new compact engines and hybrid systems to partners such as Subaru, Mazda and Suzuki.
• Mercedes-Benz lowered its full-year 2026 earnings guidance due to higher costs and weak sales in China.
• Volvo Car will cut an additional 2,500 jobs amid efforts to achieve another $500 million in costs savings. The automaker faces declining sales in China as demand for Western-developed cars dwindles, while import tariffs are reducing its U.S. profitability.   
• Volvo Group will limit order slots for North American 2027 trucks to prevent the order book from filling up too far into the year, due to uncertainty surrounding the timeline for the Environmental Protection Agency to finalize its nitrogen oxide (NOx) emissions standards for model year 2027 and later heavy-duty vehicles. Volvo Group expects 2027 heavy-duty truck retail sales to rise 13% YOY to 300,000 units.
• The Wall Street Journal provided an overview of the production decisions that have led to shortages of Toyota’s best-selling RAV4 SUV.
• A number of Chinese automakers are adding physical knobs and buttons for frequently used vehicle functions such as climate control and sound volume, due to proposed regulations in China that are expected to require physical controls for safety-critical functions beginning in July 2027.

AUTONOMOUS TECHNOLOGIES AND VEHICLE SOFTWARE

• Tesla is targeting annual production of 5 million vehicles by 2030, due to rising demand for Full Self-Driving (FSD) automated driving systems. Tesla reported 1.7 million paid FSD subscribers in the third quarter of 2026, up from 1 million in the same period last year. Elon Musk also indicated Optimus humanoid robots could begin shipping to companies by the end of 2027.  
• A Capgemini Research Institute report found that nearly seven in ten of the assessed automakers and suppliers already use (33%) or pilot (35%) agentic AI in product development and engineering workflows. Despite widespread trials, only 5% of organizations report having fully mature AI governance frameworks, amid ongoing challenges around data quality, traceability, and accountability.
• Toyota plans to deploy its Arene software platform in 10 million vehicles annually across 50 models by 2030.
• GM has a goal to cut its vehicle development timeline in half by using AI and digital simulations, according to an update at the second annual GM Forward technology preview event. Separately, the automaker announced it will transfer the listing of its common stock to the Nasdaq from the New York Stock Exchange, to emphasize its “technology-driven strategy. “
• The Wall Street Journal provided an update on driverless semi truck pilot projects and deployments in Texas.
• As part of an extended strategic partnership, Mercedes will utilize Nvidia’s Hyperion compute and sensor architecture to support automated driving capabilities in its future vehicles.

MARKET TRENDS AND REGULATORY

• New vehicle sales in China are down 22% through September this year, compared to the same nine-month period in 2025.
• New vehicle sales in Europe are up 5.7% year-to-date through September, according to data from the European Automobile Manufacturers’ Association (ACEA). In the first nine months of 2026, hybrid-electric models accounted for 36.3% of the EU car market, followed by petrol and diesel cars combined at 28.2%, battery-electric vehicles (BEVs) at 22.7%, and plug-in-hybrid electric vehicles (PHEVs) at 10.1%. Chinese brands represented a record 14.6% share of new vehicle sales in Europe in September.
• European automakers are reportedly approaching a deal that would end a requirement for a 100% reduction in tailpipe CO2 emissions for all new passenger cars and vans sold in the region starting in 2035. A recent proposal could instead require automakers to reduce emissions by 87.5% by 2035, with a further 7.5% offset by using green steel.
• A union representing 250 watchmen voted to authorize a strike at the ports of Los Angeles and Long Beach that could begin as soon as November 1 if a deal is not reached.
• The Association of American Railroads reported the volume of intermodal containers and trailers transported by railroads in the week ending October 17, 2026 was up 12.6% from a year earlier. According to the Journal of Commerce, U.S. railroads are expected to raise rates for intermodal shipping in coming contract renewals with shippers.
• Penske Automotive Group announced plans to be taken private after agreeing to a bid from shareholders Penske Corp. and Mitsui & Co. that values the automotive retailer at $16.3 billion. The deal is expected to close in the first quarter of 2027.

HYBRID AND ELECTRIC VEHICLES

• U.S. EV investment reversals amid rising demand for electrified vehicles in China, Europe, and emerging markets are raising concerns about U.S. automakers’ ability to compete globally in the future.
• GM will invest $750 million at its Lansing Delta Township Assembly plant in Michigan to produce hybrid crossover vehicles.
• Stellantis is considering exporting China-built electrified Jeeps to markets that include Canada and Mexico starting in 2027 through its Dongfeng joint venture.
• Chinese automaker Chery Automobile is reportedly exploring options to establish vehicle production in Canada as it prepares for the launch of new-energy vehicle sales in that market in 2027.
• A number of European automakers still face unresolved questions about compliance with the EU Battery Passport, a digital identity and lifecycle tracking system requirement for EV batteries that is scheduled to take effect in February 2027.
• Stellantis plans to build small EVs at its Pomigliano plant in Italy on a platform developed with Chinese partner Leapmotor, starting with two models slated to launch in 2028.Through its partnership at a Stellantis plant in Spain, Leapmotor became the first Chinese automaker to build both EVs and batteries in Europe.
• GM will close its Brownstown Battery Assembly plant near Detroit after opting not to renew the lease. The facility produced battery packs and EV components for the Cadillac Celestiq and the Chevrolet Corvette E-Ray.