The AI in Automotive industry in 2026 is evolving as AI, autonomous technologies, and software-defined vehicles reshape global mobility systems. This AI in Automotive Market Report examines the trends and technologies driving vehicle intelligence, operational efficiency, safety advancement, and data-driven mobility innovation. What initially appeared to be a niche sector is now the foundation of the auto industry’s transition.
Explore the Top 10 Automotive Trends & Innovations in 2025
Further, its Craidlr ATX-G gateways are integral to the surface temperature & vibration monitoring solution, catering to diverse automotive testing needs. These gateways, combined with advanced transducers, facilitate real-time data collection. The Global Startup Heat Map below highlights the global distribution of the 4800+ exemplary startups & scaleups that we analyzed for this research. Created through the StartUs Insights Discovery Platform, the Heat Map reveals high startup activity in the US, Europe, and India. Regenerative braking systems, crucial in EVs and hybrid cars (HEVs and PHEVs), contribute to energy recovery rates of 5% to 20%, depending on driving conditions.
Automotive purchases will shift to online
Automakers like Toyota and QuantumScape are heavily investing in this technology, and we can expect breakthroughs in battery chemistry and design in the coming years. As urban areas grow more congested, the focus is shifting from traditional car ownership to mobility-as-a-service (MaaS) models. Fleet-as-a-Service (FaaS) solutions, particularly autonomous fleets, are set to transform how people navigate cities. By 2025, nearly all new vehicles are expected to feature advanced connectivity options, integrating aspects of digital life directly into driving experiences.
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This process enables us to identify the most impactful and innovative trends in the automobile industry. The latest technology in automobile industry have revolutionized the way vehicles are designed, manufactured, and sold, and the vehicles themselves have become much more than a means of transport. A recent survey reveals automotive companies have product development and launch cycles shorter than 18 months. As per market and industry experts, these four trends represent the future of the automotive industry. It won’t take too long for the CASE to accelerate the transition of the automotive industry from the way it has been working for hundreds of years.
Cars have become even more connected
- The platform features customizable work product templates, detailed instructions, and comprehensive checklists for self-assessment.
- Its solution, carSECURITY, provides organizations with a complete cybersecurity process landscape.
- The Latin America Energy Organisation (Olade), released a report showing that with the increase in supply, lower prices and tax incentives, Latin America and the Caribbean have great potential for EV growth.
- 2025 is predicted to be a big year for self-driving taxi services, as companies look to re-imagine the future of the automotive and taxi-hailing industry.
- The chip shortage is one-factor holding cars back from getting to the dealership lots.
- Supply chain resilience and nearshoring strengthen operational stability, while vehicle cybersecurity ensures trust in connected ecosystems.
- Technological advancements, changes in consumer preferences, regulatory changes, and global economic conditions drive these trends.
The shortages have forced manufacturers to delay product launches and reduce outputs, among other issues. Asia, home to key production hubs, remains at the epicentre of attempts to address this crisis, with nations like Taiwan investing heavily in scaling chip production. Additionally, Europe and the U.S. have sought to bolster their chip and semiconductor production with the ‘European Chips Act’ and the ‘CHIPS and Science Act’, respectively. Whilst these acts have been active for some years now, the landscape has not changed drastically. Until these efforts bear fruit, the industry will need to focus on mitigating risks and prioritising demand effectively.
Automotive industry: Where companies stand today – and what is missing
The standard ranges from SAE Level 0 (no automation) to SAE Level 5 (full automation). The Society of Automotive Engineers (SAE) “Levels of Driving Automation” standard shows how stages of vehicle automation progress. In China, it was even reported that lithium-ion battery pack prices fell below $100/kWh for the first time. It’s estimated that to meet many of these net-zero emission goals, EVs will have to climb to at least half of all new car sales by 2050. Countries and states that have committed to phasing out the sale of internal combustion engines.
Michelin’s development of tyres composed of 45% sustainable materials is a noteworthy example of how companies are rethinking material usage to minimise their environmental footprint. Henkel is using digital simulation tools to co-develop EV battery designs with automotive partners. The simulations improve thermal management, safety, and efficiency to meet the demands of future mobility. As we reflect on 2024, it’s clear that this year was a turning point for automotive manufacturing.
Success will depend on manufacturers’ ability to balance technological advancement with practical implementation while meeting evolving consumer expectations. The transformation of the automotive sector is far from complete, but the direction is clear – towards a more sustainable, connected and intelligent future of mobility. Traditional internal combustion engine (ICE) vehicles are steadily losing ground as governments worldwide implement stricter regulations, including the EU’s upcoming ban on new ICE vehicle sales by 2035. This regulatory advancement, combined with growing environmental awareness, is accelerating the shift towards electric mobility. Canadian startup Aadhya Navik designs software solutions that improve safety, comfort, and traffic efficiency in autonomous driving.
What technology is used in the automotive industry?
Indian startup SWYTCHD manages vehicle subscription services that focus on electric two-wheelers and cars. This enables an all-inclusive model that replaces ownership with monthly flexibility. Its RC ONE driverless vehicle combines proprietary software and hardware with automotive-grade components to achieve low-speed autonomous operation.
- The market for FCEVs is expected to grow at a remarkable CAGR of nearly 70%, through 2026.
- The Tree Map below illustrates the top 10 automotive trends that will impact companies in 2024.
- French startup Airnity provides a cellular connectivity platform for the automotive industry to enhance connected car operations.
- In some cases, car dealerships are charging huge markups on the inventory they do have.
- One of the most significant shifts in the automotive industry is the widespread adoption of electric vehicles (EVs).
- The APH-01 incorporates flax fiber in its body shell, which reduces weight, increases impact resistance, and improves vibration damping.
- FlxTran’s approach improves connectivity and access to opportunities beyond major cities.
- Internet of Things (IoT) and real-time monitoring solutions improve shipment tracking, warehouse oversight, and production visibility.
- The main issue holding back the popularity of these vehicles is a lack of hydrogen fueling stations.
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In these regions, shared mobility options like vans, minibuses, and two- and three-wheelers are more common and often electrified due to their affordability. In India, for example, electric car sales rose by 70%, driven by government incentives and new models, though future growth may be impacted if it sees subsidy reductions. The automotive manufacturing industry is evolving rapidly as manufacturers respond to technological advancements, consumer preferences, and regulatory changes. Several leading OEMs have already announced plans to adopt the chipset for their automotive solutions, including BYD, Nuro, XPENG, Volvo and Zeekr. Contact us today to make critical data-driven decisions, prompting accelerated business expansion and breakthrough performance. With customers becoming more demanding, rules and regulations are becoming stricter, and competition is stronger and faster.
💻 Trend 2: The Rise of Software-Defined Vehicles (SDVs) – Cars as Computers
Localized production and sourcing are gaining momentum as companies aim to mitigate risks and ensure a steady supply of components. Automakers are adopting greener processes, from sourcing eco-friendly materials to utilizing renewable energy in manufacturing plants. Many of those trends will be on display at the Consumer Electronics Show next week in Las Vegas. Honda will be showing its Series 0 platform that will be used for its SAE Level 4 driverless car in 2026. Recent auto trends show that customers prefer to experience a car or dealership before purchasing.
Autonomous Driving: Waymo Offers 250K Paid Rides Weekly Across US Cities
The push toward electrification is reshaping the automotive manufacturing landscape. By 2025, we will see increased investments in EV production as automakers cater to evolving consumer demands and regulatory pressures. However there are huge opportunities for the industry in the shift to software-defined vehicles and autonomous driving. These shifts are beneficial to ARM, STMicroelectronics, NXP Semiconductors and Infineon Technologies. While there are a lot of opportunities ahead for the industry, there will be plenty of challenges like cost pressures, growing competition, and globalization. The growing shared mobility trend also looms as more people are using shared transportation methods instead of owning cars.
While the market for cars valued below $80k is expected to remain flat through 2031, the luxury car market is predicted to grow at up to 14% CAGR. The chip shortage is one-factor holding cars back from getting to the dealership lots. But, there are other various supply chain issues and factory closures that have led to low inventory, too. After demand started coming back, there simply wasn’t an adequate supply of chips, and the auto industry has been feeling the effects ever since. The parts industry is benefiting from the ever-increasing average age of vehicles on the road.
Therefore, you should focus on environmentally conscious manufacturing processes and eco-friendly cars like electric vehicles. This deal comes at a time when car sales in the EU have seen a noticeable dip as consumer preferences shift. Data suggests a decline in car sales across most categories, particularly traditional fuel vehicles like petrol and diesel, which saw significant drops in market share and registrations. While BEVs and PHEVs showed some growth in September 2024, the year-to-date figures for BEVs are still lower than last year, and PHEVs also experienced a notable decline.
It provides grants, loans, and incentives to expand domestic fabs, semiconductor R&D, and the broader supply chain. It offers ready-to-use workflows across system, software, and project management processes. Its MotionSafe Privacy platform uses algorithms to monitor controller area network (CAN) traffic and detect anomalies. The platform also erases personally identifiable information (PII) from vehicle systems to maintain privacy. For example, over-the-air (OTA) updates depend on secure encryption and authentication to block malicious code injection. Likewise, fleet operators strengthen defenses for telematics, routing data, and driver information against manipulation.
- Emerging automotive industry trends include the increased adoption of electric vehicles (EVs), advanced semiconductors, and the growing focus on vehicle cybersecurity.
- The global automotive industry, responsible for 10% of the world’s carbon dioxide emissions, faces ongoing pressure to overhaul its practices.
- Every year brings with it new shifts in technology, consumer behaviour, and market dynamics, all of which shape and build automotive as a cornerstone industry of the world.
- Lastly, MARV.Automotive is a configurable and extensible data management platform that reliably transmits data from the vehicle to the cloud.
- Regulations such as Europe’s General Safety Regulation 2 (GSR2), US mandates for automatic emergency braking, and China’s target of 70% Level 2-3 adoption by 2025 compel automakers to improve deployment.
- Automakers reduce reliance on distant suppliers as trade tensions and conflicts expose the fragility of global networks.
Connected vehicles are entering a software-defined era where 5G, AI, and V2X convert cars into real-time data nodes that communicate smoothly with infrastructure, other vehicles, and the cloud. Our new report spotlights 10 connected vehicle trends to watch in 2026 that promise safer, smarter mobility and fresh revenue streams for automakers. Curious how electric vehicle trends like solar integration, AI-powered systems, and modular design are innovating mobility? This report explores the top 10 electric vehicle trends shaping the industry in 2026. Discover how these shifts improve charging, safety, and sustainability and what they mean for your business.
- The global automotive blockchain market is experiencing significant growth — it is projected to reach USD 6.11 billion by 2032.
- Further, Jaguar Land Rover is pioneering a closed-loop recycling process for seat foam, turning waste from old vehicles into high-quality material for new ones.
- The automotive manufacturing industry is evolving rapidly as manufacturers respond to technological advancements, consumer preferences, and regulatory changes.
- It builds connected EV models that operate reliably on diverse terrains and promotes sustainable mobility solutions for the region.
- The startup’s technology allows these pods to adapt across industries, enhancing efficiency and safety in transporting people and goods.
- The used car market is also expected to become more important for consumers looking for cheaper EVs, which typically face greater levels of depreciation than internal combustion engine vehicles.
- Trends span sustainable manufacturing, EV expansion, supply chain nearshoring, vehicle cybersecurity, automotive semiconductors, sensor fusion, autonomous driving, subscription models, SDVs, and V2X.
- Automotive suppliers are renegotiating their vendor/supplier contracts to align with these new predictions.
In 2024, EV sales reached 17 million units, accounting for over 20% of global new car sales. Also, the EV market is projected to reach USD 6.16 trillion by 2035 at a CAGR of 25.32%. Autonomous driving demonstrates scalable deployment across passenger and freight use cases, and subscription models give consumers flexible access to vehicles. Software-defined vehicles redefine business models through centralized computing and OTA upgrades.
- Moreover, the technology combines EV chargers, a DC bus, smart inverters, and an energy management platform.
- Indian startup SWYTCHD manages vehicle subscription services that focus on electric two-wheelers and cars.
- Espite growing inventory levels, new vehicle prices continue to rise, reaching a record average transaction price of $49,507 in December 2022.
- The semiconductors also enable infotainment, voice assistants, and AI-driven interfaces for a better user experience.
- Manufacturers are partnering with tech companies to design and produce the new operating systems necessary for the next generation of technologically advanced vehicles.
- Instead of owning a car, consumers will increasingly use digital platforms to access transportation services on demand, whether through ride-sharing, car-sharing, or subscription models.
- In the US, the CHIPS and Science Act allocates USD 52.7 billion in funding and offers a 25% investment tax credit.
- For this, it uses advanced system-on-chips (SoCs) that integrate mixed-signal analog and digital signal processing (DSP) algorithms.
- The need for high-performance processors is also growing as a result of software-defined vehicles (SDVs), which rely on semiconductors for ongoing updates and subscription-based services.
In 2025, many automakers will focus on creating vehicles that are easier to disassemble, repair, and recycle at the end of their lifecycle. This approach could significantly reduce waste and contribute to a more sustainable automotive industry. Leading companies such as Volkswagen, General Motors, and Volvo have committed to producing zero-emission vehicles and achieving carbon-neutral operations by mid-century. In line with this, automakers focus on sustainability in their manufacturing processes, energy sourcing, and material selection. The SDVs market is set to reach 7.6 million units in 2025 from 6.2 million units in 2024.
b. Charging Infrastructure Expansion
Did you know that EVs are projected to make up nearly 20% of global vehicle sales in 2026? That’s no longer a distant future — it’s happening now, and it’s transforming everything from manufacturing floors to your driveway. Connectivity is one of the key trends in automotive industry, and 5G is what takes it to a more advanced level.
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We expect to see the concept of Mobility-as-a-Service (MaaS) develop through 2025. Initial deployments focus on simpler, grid-like cities such as Phoenix in the USA, Milton Keynes in the UK, and Singapore. Soon, this will expand to more complex urban environments as vehicle access becomes increasingly prioritised over ownership among the driving masses. The startup’s product range includes residential wallboxes from 7 to 22 kW and commercial chargers up to 132 kW. These units support CCS2 and CHAdeMO standards, ensuring broad adaptability across EV models. For example, Qualcomm released reports and white papers highlighting C-V2X as a critical capability for intelligent transportation systems.
Its vehicle control system processes passenger comfort thresholds related to acceleration, deceleration, and jerk rate. It then adjusts driving decisions to minimize motion sickness and maintain smooth operation. The global automotive sensor fusion market is projected to reach USD 3.3 billion by 2030 at a 42.4% CAGR.
In 2025, the focus will be enhancing ADAS features, such as adaptive cruise control, lane-keeping assistance, automatic emergency braking, and more. While some regions already allow limited AV testing and deployment, 2025 will likely see a more transparent legal framework surrounding autonomous driving technology. This regulatory clarity will pave the way for broader AV adoption in cities, particularly in controlled environments like urban areas or designated autonomous vehicle lanes. As autonomous vehicles become more mainstream, governments and regulatory bodies will need to create new laws to ensure their safe deployment.
Integrated Powertrains will be Standard in EVs of the Future.
Additionally, customer data drives sales, optimizes supply chains and informs new vehicle designs. Israeli startup NoTraffic develops an AI-powered traffic signal platform that digitizes road infrastructure management and connects drivers to the city roadways to manage various traffic-related challenges. The data of all road users is streamed and processed in real-time to empower smart mobility. The solution also serves as the base for additional services such as micropayments and micro-mobility.
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Similarly, hardware security modules (HSMs) protect encryption keys check accidents using plate or VIN and authenticate critical functions, with secure microcontrollers embedded into electronic control units (ECUs). Additionally, Motoreto streamlines operations with features such as multi-channel publishing, branded digital tools, and integrated logistics and financing. It produces alternating current (AC) wallboxes for residential charging up to 22 kW and AC column stations for companies and municipalities.
