Summary of Key Points
The U.S. market has become a battleground for global automakers due to tightened policies (the countdown to the USMCA agreement + increased regional production requirements) and shifting consumer preferences (a surge in demand for hybrid vehicles). Major automakers are increasing their investment in domestic manufacturing capacity in the U.S. and adjusting their product lines, with a focus on hybrids, SUVs/pickups, and flexible production systems, in order to avoid tariffs and seize market opportunities. Chinese automakers, on the other hand, are taking a wait-and-see approach due to tariffs and regulatory restrictions, initially using Canada as a testing ground.
I. Policy Changes: Why Automakers Are Rushing to Build Plants in the U.S.
The U.S. government decided not to renew the USMCA (North American Free Trade Agreement) in July 2026, setting a 10-year deadline for its expiration and initiating annual reviews. Additionally, it has proposed raising the requirement that 82% of the content in North American-made vehicles must be U.S.-sourced to qualify for duty-free status, with at least 50% of that value coming from the U.S. In simple terms, vehicles manufactured in Mexico or Canada can no longer enter the U.S. duty-free; if they do not meet these new standards, they will face a 25% tariff, which could cut profits in half.
This has turned the question of "where to manufacture cars" from a cost consideration into a matter of survival: automakers must move their production capacity to the U.S. to avoid losing price competitiveness or seeing their profits plummet.
II. Nissan & Stellantis: Repairing the Foundations in the U.S. Market
Nissan: Emerging from the Shadows of Rental Cars
Nissan used to rely on selling large volumes of cars to rental companies, offering significant discounts and eroding its brand value. Its market share has dropped from 9% a decade ago to 6%. With a new CEO at the helm, Nissan is focusing on revitalizing its presence in the U.S.:
- Launching a hybrid version of the Rogue to meet the growing demand for hybrids;
- Developing rugged SUVs with truck-like frames to appeal to off-road enthusiasts;
- Reviving the classic Xterra model to attract former customers.
The goal is to transform from a car primarily for rental companies into a mainstream household choice.
Stellantis: Investing Heavily to Strengthen the U.S. Industrial Base
Stellantis (which includes brands like Jeep and Dodge) sold 1.2 million vehicles in the U.S. in 2024, with 40% of those being imports from Mexico and Canada. To avoid tariffs, it is investing $13 billion to expand its capacity:
- Reopening the Illinois factory to produce the Jeep Cherokee;
- Building a new pickup truck plant in Ohio;
- Manufacturing large SUVs in Michigan;
- Producing new engines in Indiana.
Stellantis has also included the U.S. revitalization as part of its 2030 strategy, aiming to launch 60 new models, shifting from cross-border production to domestic manufacturing to maintain profitability.
III. German Luxury Cars: Turning the U.S. from a Market to a Manufacturing Hub
German luxury cars once relied on their "Made in Germany" label for premium pricing, but now manufacturing in the U.S. is more cost-effective:
- BMW: Investing $1.7 billion to expand its Spartanburg factory (the global hub for the X series), with plans to start producing the all-electric iX5 by the end of 2026 and aim to produce six all-electric models in the U.S. by 2030. The new X5 will offer a range of power options, including gasoline, diesel, hybrid, electric, and hydrogen.
- Mercedes-Benz: Investing $4 billion in its Alabama SUV factory to produce the best-selling GLC model in the U.S. (the Bremen factory will focus on other markets). The North American CEO stated that localizing popular models is highly profitable due to tariff savings.
IV. Korean and Japanese Automakers: Rapidly Adjusting to Hybrid Demand
Hybrid vehicle sales in the U.S. increased by 19% in 2026, and Korean and Japanese automakers responded quickly:
- Hyundai/Kia: Their new factory in Georgia was originally designed for all-electric vehicles but has rapidly switched to producing hybrids (with Hyundai's hybrid sales increasing by 71%). They plan to increase annual production capacity from 800,000 to 1.2 million units, with Kia accounting for 40% of the output.
- Toyota: Launched a battery factory in North Carolina to supply hybrid models such as the Camry and RAV4, and is investing an additional $10 billion to accelerate its growth (with second-quarter sales up 1.1% year-over-year).
- Honda: Investing $1 billion to upgrade its Ohio factory to implement flexible production lines that can produce gasoline, hybrid, and all-electric vehicles, allowing for quick adjustments to meet changing market demands.
V. Supply Chain Competition & Chinese Automakers' Hesitation
- Supply Chain Movements: Italian tire manufacturer Pirelli plans to invest $1-2 billion in expanding its capacity in the U.S. and develop smart tires with sensors. Jaguar Land Rover, lacking a U.S. factory, is collaborating with Stellantis on vehicle development.
- Challenges for Chinese Automakers: Companies like BYD and Chery are using Canada as a testing ground due to lower tariffs and similar regulations. However, the U.S. imposes many restrictions on Chinese automakers; for example, Polestar was banned from selling cars in the U.S. because it uses Chinese software and hardware, while Volvo (owned by Geely) only obtained approval after adjusting its supply chain.
Conclusion
The U.S. market is now driven by a combination of policies and consumer trends, with a clear preference for hybrids and SUVs. Global automakers are competing fiercely to establish a presence there, while Chinese automakers are still hesitating. The battle for success in this market hinges on the speed of capacity expansion, product flexibility, and compliance with U.S. supply chain regulations.