Foley Automotive Update – Rail, Road & Cycling – United States
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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
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Key developments
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.
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.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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