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Key Legal Insights from Foley’s Automotive Team<\/p>\n Analysis by Julie Dautermann, Competitive Intelligence
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HYBRID AND Electric Vehicles<\/p>\n
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\nlong-term business strategies, investments, partnerships, and
\ntechnology. Contact the authors, your Foley relationship partner,
\nor our Automotive Team to discuss and learn more.<\/p>\n
\nU.S. 2025 new light-vehicle sales reached<\/a> approximately 16.3 million
\nunits, up2% year-over-year, with sales attributed to the
\nspending power of higher-income consumers.
\nHouseholds earning more than $150,000 annually accounted for 43% of
\nthe new cars sold last year, up from 30% in 2019. Households
\nearning less than $75,000 comprised 26% of 2025 sales, down from
\n37% in 2019.
<\/p>\n
\nU.S. 2026 new light-vehicle sales are projected<\/a> to range from 15.8 million
\nunits to 16.1 million units. Cox Automotive suggested that
\n“a high 15 million level may be the new norm for the
\nindustry” due to factors that include high new-vehicle prices<\/a>.
<\/p>\n
\nCanadian Prime Minister Mark Carney does not expect<\/a> to pursue separate, near-term
\ndeals with the Trump administration to lower sector-specific
\ntariffs, indicating negotiations would instead be part of this
\nyear’s review of the U.S.\u2013Mexico\u2013Canada
\nAgreement (USMCA). Canada intends to begin formal USMCA
\ndiscussions with the U.S. later this month.
<\/p>\n
\n“Fragmented ownership of trade-related data is
\nincreasingly a risk” for supply chain
\nexecutives, according to commentary from consultancy
\nAlvarez & Marsal on the upcoming USMCA review
\nand U.S. trade policy featured in Mexico Business News<\/a>.
<\/p>\n
\nThe U.S. Trade Representative postponed<\/a> imposing new tariffs on
\nChinese semiconductor imports until June 23, 2027,
\nafter affirming that China’s “acts, policies, and
\npractices are actionable under Section 301 of the Trade Act of
\n1974.”
<\/p>\n
\nPwC’s key themes<\/a> for automotive M&A in
\n2026 include supplier consolidation in
\nresponse to “rising costs and subdued end-market demand,”
\nas well as prioritization to “divesting non-core assets and
\ninvesting in digital ecosystems.”
<\/p>\n
\nAnnouncements during CES 2026 held this week
\nin Las Vegas included:
\n
\nBosch plans<\/a> to invest $2.9 billion in artificial
\nintelligence technologies by the end of 2027. The supplier also announced<\/a> new AI-based driver-assist
\nsystems, a partnership with Kodiak AI to
\ndevelop platforms for autonomous trucks, and an expanded
\ncollaboration with Microsoft to use AI to optimize
\nfactory production.
\n
\nBMW plans to launch<\/a> in-vehicle AI assistant
\ntechnology developed in collaboration with Amazon.
\n
\nMercedes’ MBUX infotainment system will integrate<\/a> AI from both Microsoft and
\nGoogle.
\n
\nNVIDIA announced<\/a> a group of AI platforms and models
\ndesigned to enhance the development of autonomous vehicles.
\n
\nCompanies including AMD<\/a> and HERE Technologies<\/a> announced new capabilities
\nto enhance the development of software-defined vehicles
\n(SDVs).
\n
\nZF, Google, and Stellantis partner
\nLeapmotor are among the companies that are increasing their adoption<\/a> of
\nQualcomm’s chip platforms to support
\nSDVs.
\n
\nFord will launch<\/a> an eyes-off, hands-free
\ndriving system in 2028, beginning with a $30,000
\nall-electric vehicle that will be produced on the automaker’s
\n“Universal EV Platform.”
\n
\nLucid Motors, Uber, and Nuro
\nrevealed<\/a> their jointly developed
\nGravity SUV robotaxi purpose-built for Uber’s
\nride-hailing network.
\n
\nHyundai plans<\/a> to begin deploying humanoid
\nrobots at its manufacturing plant in Georgia in 2028.
<\/p>\n
\nHARMAN International announced<\/a> plans to acquire ZF
\nFriedrichshafen’s advanced driver-assistance systems
\nbusiness for $1.76 billion.
\n
\nGartner’s 2026 Top Trends for Automotive
\nCIOs<\/a> emphasized the importance of agility and
\nadaptability, instead of reliance on scale, to mitigate
\nthe effects of ongoing market volatility.
\n
\nHyundai expects<\/a> geopolitical
\nuncertainty and broadening technology adoption
\ngaps to impact automaker profitability and intensify
\nindustry competition in 2026. Hyundai intends<\/a> to sell 4.16 million vehicles globally
\nthis year, following 2025 sales of 4.14 million vehicles.
\n
\nAutomotive News<\/a> provided an
\nupdate on the brands expected to participate during the January
\n14-25, 2026 Detroit Auto Show.
\n
\nOn January 5, Honda announced it will extend<\/a> a production shutdown at three
\nChinese factories for two more weeks due to a semiconductor
\nshortage.
<\/p>\n
\nThe Internal Revenue Service released proposed rules<\/a> for auto loan interest
\ndeduction established by the “One Big
\nBeautiful Bill Act.” The provision will allow
\nborrowers to deduct up to $10,000 annually in interest on new
\nvehicles for personal use if applicants meet certain criteria and
\nthe model’s “final assembly” was in the U.S.
\n
\nA January 14, 2026 U.S.
\nSenate committee hearing on
\nvehicle regulation and affordability that was to
\nfeature the Detroit 3 CEOs was postponed<\/a> after Ford CEO Jim Farley raised
\nconcerns related to scope and timing.
\n
\nChina is still restricting U.S.
\nexports of certain rare earth elements
\nthat are required as inputs to produce permanent
\nmagnets and other products, according to unnamed industry
\nand government officials quoted in Bloomberg<\/a>.
<\/p>\n
\nSoftware<\/p>\n
\nAmazon Web Services and automotive technology
\nsupplier and Continental spin-off AUMOVIO will use<\/a> generative AI to facilitate the
\ndevelopment process for autonomous vehicles, beginning with
\nAurora’s self-driving trucks.
\n
\nWardsAuto created a list<\/a> of some of the most significant
\nsoftware-related vehicle recalls of 2025.
\n
\nAutonomous driving company Mobileye will acquire<\/a> AI-powered humanoid robotics
\nstartup Mentee Robotics for $900 million.
\n
\nMercedes will debut<\/a> its advanced driver assistance
\nsystem (ADAS), MB.Drive Assist Pro, in the U.S.
\nlater this year. The system is considered Level 2
\nautonomy, defined<\/a> by the Society of Automotive
\nEngineers (SAE) as technologies requiring constant human
\nsupervision when the features are engaged. The automaker already
\noffers a Level 3 autonomous system \u2013 MB
\nDrive Pilot \u2013 in select markets for operation on
\nlimited-access highways.
\n
\nMcKinsey analysis<\/a> predicts that vehicles equipped with
\nLevel 2 ADAS could comprise over 50% of
\nglobal vehicle sales by 2030. Vehicles with Level
\n3 autonomous driving technology could
\nrepresent 16% of global vehicle sales by 2035,
\ncompared with less than 1% in 2025.
\n
\nChallenges impacting the rollout of
\nSDVs include<\/a> software development complexities,
\nregulatory pressures, and hardware constraints<\/a>.
\n
\nBusiness Insider<\/a> provided an overview
\nof Rivian’s plans to shift from SDVs to
\n“AI-defined vehicles.”
\n
\nGartner recently predicted<\/a> that only 5% of automakers
\nwill maintain strong AI investment growth by 2029,
\ncompared to over 95% today, noting the “automotive
\nsector is currently experiencing a period of AI euphoria,
\nwhere many companies want to achieve disruptive value even before
\nbuilding strong AI foundations.” Gartner also stated that
\ncompanies with “strong software foundations, tech-savvy
\nleadership, and a consistent very long-term focus on AI will pull
\nahead from the rest, creating a competitive AI
\ndivide.”
<\/p>\n
\nU.S. 2025 sales of battery-electric vehicles
\n(BEVs) are estimated to have declined<\/a> 2.1% YOY to 1.27 million units.
\n
\nThe percentage of light-vehicle models available with
\nhybrid technology in the U.S. has roughly doubled<\/a> since 2020.
\n
\nTesla sold<\/a> 1.64 million battery-powered EVs
\nworldwide in 2025.
\n
\nBYD sold<\/a> 2.26 million battery-electric vehicles
\nand 2.29 million plug-in hybrid EVs globally in 2025.
\n
\nHonda will acquire<\/a> LG Energy
\nSolution’s stake and related assets from the
\ncompanies’ Ohio EV battery joint venture plant
\nfor $2.9 billion.
\n
\nChina’s Xiaomi plans<\/a> to sell 550,000 EVs globally in 2026, up
\nfrom 410,000 in 2025.
\n
\nVolkswagen of America will not produce<\/a> the ID.Buzz electric
\nminivan for the 2026 model year in the U.S., citing low
\nsales volumes and the impact of tariffs.
<\/p>\n
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