Bigger EVs fall short as shoppers shift toward base models

With U.S. auto shoppers experiencing price fatigue, Edmunds predicts a slight drop in new passenger vehicle sales in 2026, down about 400,000 from the 16.4 million sold in 2025. The average new vehicle price rose to $50,000 late last year and is expected to remain at that level this year.

Sales trends for 2026 include an increased demand for base model vehicles and a shift away from electric vehicles (EVs) to hybrid and internal-combustion-engine models.

In past years, base model vehicles were an afterthought at dealer lots. This year, they’re seen as a way to increase affordability. With advanced safety features, touchscreens, and smartphone integration, today’s base models are no longer bare-bones offerings. One major U.S. auto manufacturer’s base model sales grew by 26% last year, with some individual models selling 75% more than in 2024.

With the loss of tax incentives for EVs, manufacturers are changing their outlook for that segment. While intermediate electric models have found their niche with consumers and with commercial buyers whose fleet vehicles can regularly return to charging facilities, larger EVs such as pickup trucks and big SUVs are seeing lower-than-projected adoption. More than 300,000 EVs are expected to return from lease in 2026, adding to already saturated inventories.

As cyber risks grow, so must countermeasures

The automotive cybersecurity market is expected to more than double in size in the coming years, reaching $17.3 billion by 2034, as connected and software-laden vehicles continue to enter the market.

Features such as advanced infotainment systems, cloud-linked navigation, and increased use of AI and machine learning have transformed vehicles into data hubs, opening multiple entry points for hackers. Meanwhile, the International Centre for Automotive Technology is working on a cybersecurity certification process that could result in global security standards.

As these risks evolve, automotive shippers will need logistics providers that are audit-ready, provide end-to-end visibility, and offer recovery plans in case of breaches.

Tariff updates

No new U.S. tariffs have taken effect since November 2, 2025, underscoring the gap between policy discussions and actual implementation. In the coming months, two big issues have the potential to change the trade environment again or give companies breathing room to optimize their sourcing strategies:

• A Supreme Court decision will determine whether the U.S. administration was justified in invoking a national emergency to levy certain tariffs and whether these tariffs will stand or possibly be refunded. Court watchers expect the decision in the second half of February at the earliest. The case pertains to global reciprocal tariffs and tariffs intended to stop the flow of illegal drugs, but not to tariffs on specific commodities such as steel, aluminum, and copper that were levied under a different type of authority.
• A review of the U.S.-Mexico-Canada Trade Agreement (USMCA) is under way. These negotiations may result in changes to the deal mid-year, affecting North America’s highly integrated automotive supply chains.

Other developments of note:

• The U.S. administration announced it may raise tariffs on South Korean imports, saying that country has not lived up to its end of the trade deal made in 2025. It’s important to note this is an ongoing policy discussion and has not progressed to implementation. If implemented, tariffs on passenger vehicles and auto parts could increase from 15% to 25%.
• Mexico’s new tariffs took effect on January 1, 2026. The tariffs target Asian—mainly Chinese—imports, with 5–50% rates. Chinese cars were tagged with the full 50% rate. Also affected are auto parts and components for auto parts such as steel, aluminum, and plastics.
• Canada and China made a deal that will allow 49,000 Chinese electric vehicles to enter the Canadian market in 2026 at a 6.1% tariff instead of the previous 100%. This number will rise to 70,000 within five years.
• Canada’s 50% steel surtax on goods from countries without free trade agreements, most notably China, took effect on December 26, 2025.

For more information, including news of a U.S.-India trade deal, go to the Trade Policy & Customs section of this report.

Supply chain orchestration gaining ground across auto sector

Changing tariffs, government incentives, and consumer priorities add a mounting degree of complexity to supply chains in an industry already driven by a culture of continuous improvement and a broader trend toward mergers and centralization. Automotive manufacturers and their suppliers can explore 4PL supply chain orchestration for a more tailored approach to solving today’s business challenges.

Table of Contents