Foley Automotive Update – Rail, Road & Cycling

Key Legal Insights from Foley’s Automotive Team

Analysis by Julie Dautermann, Competitive Intelligence
Analyst

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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.

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