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
long-term business strategies, investments, partnerships, and
technology. Contact the authors, your Foley relationship partner,
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Key developments
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
32nd Annual Automotive Insights
Symposium.
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.
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