Automotive industry trends
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Automotive industry trends 2026+
Automotive entered 2025 at an inflection point where the EV transition collided with market reality. Global EV sales growth slowed from 35% in 2023 to 18% as early adopters saturated and mass-market consumers balked at price premiums averaging $12,000 over comparable gas vehicles.
Charging anxiety persisted despite infrastructure growth: 70% of US consumers still cite range and charging access as barriers. Chinese manufacturers flooded markets with EVs priced 30-40% below Western competitors, prompting defensive tariffs that reached 100% in some markets.
Yet 2025 also marked technological breakthroughs that could reshape economics as regulatory mandates were forced by governments. Solid-state batteries moved closer to production, software-defined vehicles became reality, autonomous technology reached Level 3 commercialization.
The automotive companies that will lead in 2026 started their fundamental restructuring process already in 2025 - accepting that EVs must reach price parity without subsidies, that software margins must offset lower service revenue, and that the century-old dealer model is incompatible with direct digital sales.
This automotive trend report explores the key developments shaping the automotive industry in the upcoming decade, the most pressing challenges to the current operating model of automotive innovation, and the most promising measures to claim innovation leadership.
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New and declining trends for 2026
The trends tracked in this year's report reflect how 2025's geopolitical fragmentation and manufacturing transformation replaced commodity concerns with strategic imperatives. As supply chain dynamics and production methods fundamentally shifted, automotive's needed to restructure.
Regionalization and reshoring of supply chains accelerated as companies responded to tariffs, geopolitical risk, and just-in-time failures by building redundant, localized production. Smart factories and Industry 4.0 integration scaled from pilot facilities to production standards as automation, digital twins, and AI-driven optimization became essential for managing complexity and maintaining quality at lower volumes across more variants.
Further, operational advancement forced organizations to minor changes. AI-driven and automated supply chain optimization expanded from logistics to end-to-end orchestration managing sourcing, production, and distribution autonomously. Regulated circularity and low-carbon supply chains evolved as regulations mandated recycled content percentages and emissions tracking throughout value chains. Material volatility and cost inflation in manufacturing intensified as battery metals, semiconductors, and specialty materials experienced price swings that traditional hedging couldn't manage.
These changes reflect an automotive industry where global supply chains fragmented into regional networks, where manufacturing intelligence became competitive advantage, and where material security required new sourcing strategies and production flexibility that previous decades' optimization eliminated.
Supplier trends
The automotive supply chain is shifting toward resilience, sustainability, and technological integration. Political factors like regionalization and transparency regulations are encouraging diversification and reduced dependency on single countries, while social trends such as ethical sourcing and consumer demand for sustainability are reshaping the value chain. The need for localized and ethically focused supply chains is growing in response to both regulatory and consumer pressures.
Technological advancements like blockchain, automation, and AI will revolutionize procurement, logistics, and production, improving efficiency and transparency. Rising material costs and economic instability are driving companies to adopt flexible and regionalized supply chain strategies. Overall, the future of automotive supply chains will focus on sustainability, innovation, and resilience to disruptions.
In the following, we highlight the three most critical supply trend developments. Download the complete list of all 75 trends, affecting the automotive industry 2026+.
AI-Driven and Automated Supply Chain Optimization
Summary: Supply chain digitization is helping companies reduce costs and improve efficiency through automation and optimization.
Current Situation: Rising operational costs in global supply chains are pushing automotive companies to explore digitization as a way to reduce expenses. Technologies such as AI, IoT, and cloud computing allow for more efficient, automated processes, improving supply chain performance.
Expected Business Development: Over the next decade, more companies will adopt digital solutions to cut costs. Digitization will optimize logistics, procurement, and supplier relationships, helping reduce manual errors and lower operational costs while improving responsiveness.
Challenges: The high initial cost of implementing digital technologies, including software and training, may deter some companies, particularly smaller suppliers. Ensuring cybersecurity and data privacy will also be critical as more supply chain processes move online.
Time to Maximum Relevance: 2-4 years
Potential Impact: High
STEEP Segment: Economic
This year’s trend development
Regulated Circularity and Low-Carbon Supply Chains
Summary: Circular economy initiatives are reshaping supply chains, focusing on recycling, reuse, and reducing material waste.
Current Situation: The automotive industry is embracing circular economy principles to reduce waste and extend the life cycle of products and materials. This includes remanufacturing, recycling, and designing products for easy disassembly and reuse at the end of their life cycle.
Expected Business Development: Companies will increasingly implement closed-loop systems, where materials are recycled and reused, minimizing the need for new resources. This trend will drive collaboration across the supply chain to ensure that materials can be repurposed efficiently.
Challenges: Adopting circular economy models requires significant changes to product design, manufacturing processes, and logistics. Coordinating with suppliers to ensure alignment with circular principles can also be challenging. Developing new business models, redesigning supply chains, meeting regulatory requirements, and achieving cost efficiency.
Time to Impact: 8-10 years
Potential Impact: High
STEEP Segment: Ecological
This year’s trend development
Regionalization and Reshoring of Supply Chains
Summary: Geopolitical tensions are pushing companies to regionalize production and diversify supply chains for greater resilience.
Current Situation: Rising geopolitical tensions, particularly between major economies like the US and China, are driving regionalization of supply chains. Governments are encouraging companies to diversify away from single-country dependencies, especially in critical industries like automotive, to ensure resilience. The push for "Made in America" or "Made in Europe" policies further supports this trend.
Expected Business Development: Over the next decade, suppliers and OEMs will increasingly seek to localize production and sourcing. This shift will lead to more regional supply hubs, particularly in North America and Europe, reducing reliance on Asian manufacturing. Companies will invest heavily in reshoring or near-shoring to mitigate risks.
Challenges: Localizing supply chains may increase production costs, and finding skilled labor and new suppliers within these regions can be challenging. There are also concerns about maintaining the same level of technological capability in localized production.
Time to Impact: 2-4 years
Potential Impact: High
STEEP Segment: Political
This year’s trend development
Manufacturing trends
The automotive manufacturing trends over the next decade focus on technological innovation, sustainability, and adaptability. Socially, there’s a demand for safer working conditions, workforce diversity, and vehicles designed for an aging population. Technologically, smart factories, automation, and AI are transforming production efficiency, with 3D printing and augmented reality enhancing customization and flexibility.
Economically, rising costs, material shortages, and energy price fluctuations are pushing manufacturers toward automation and supply chain resilience. Environmentally, decarbonization, sustainable materials, and water conservation are becoming key priorities in manufacturing. Politically, government incentives for green manufacturing and stricter environmental regulations are driving significant changes, while trade policies are reshaping global production strategies.
In the following, we highlight the three most critical manufacturing trend developments. Download the complete list of all 75 trends, affecting the automotive industry 2026+.
Material Volatility and Cost Inflation in Manufacturing
Current Situation: Global material shortages, especially for semiconductors and EV batteries, are driving up production costs in the automotive sector. Disruptions caused by trade restrictions, supply chain bottlenecks, and increased demand have strained the availability of key materials.
Expected Business Development: Companies will need to source alternative materials or negotiate long-term contracts to stabilize supply. Investing in recycling and material recovery will also help mitigate some of these cost increases.
Challenges: Material shortages can slow production, increase lead times, and raise costs across the board. Sourcing alternative materials may not always be possible without affecting product quality.
Time to Maximum Relevance: 1-3 years
Potential Impact: High
STEEP Segment: Economic
This year’s trend development
Solid-State Batteries
Current Situation: Solid-state batteries are in the research and development phase, with pilot projects and early prototypes emerging from companies like Toyota and QuantumScape.
Expected Business Development: Commercialization is expected in the 6-10 year horizon as manufacturing challenges are addressed, leading to mass production for EVs.
Challenges: Scaling production, reducing costs, addressing material stability, and creating a supply chain for new materials.
Time to Maximum Relevance: 6-8 years
Potential Impact: High
STEEP Segment: Technological
This year’s trend development
Smart Factories & Industry 4.0 Integration
Summary: Smart factories leveraging Industry 4.0 technologies are improving manufacturing efficiency and reducing downtime.
Current Situation: Smart factories, powered by Industry 4.0 technologies such as IoT, AI, and robotics, are becoming the new standard in automotive manufacturing. These technologies enable real-time monitoring, predictive maintenance, and automated decision-making on the factory floor.
Expected Business Development: Over the next decade, OEMs and suppliers will fully integrate smart technologies to optimize production efficiency and reduce downtime. Predictive analytics will allow for more precise supply chain management, reducing waste and improving productivity.
Challenges: The high cost of adopting these technologies is a barrier for smaller suppliers. Additionally, integrating smart systems with existing production processes may require significant restructuring.
Time to Impact: 2-4 years
Potential Impact: High
STEEP Segment: Technological
This year’s trend development
Usage trends
The automotive usage trends are shifting toward shared mobility, personalization, and sustainability. Socially, consumers are increasingly opting for car-sharing, ride-hailing, and personalized vehicles, influenced by trends like remote work and an aging population. Technologically, advancements in autonomous driving, AI, vehicle-to-everything (V2X) connectivity, and over-the-air updates are transforming vehicle use and improving user experience.
Economically, rising ownership costs are driving the growth of shared mobility and subscription-based services, while electric vehicles are becoming more attractive due to lower operating costs. Ecologically, the push for electric vehicles, low-emission zones, and vehicle recycling is making mobility more sustainable. Politically, government incentives, emission regulations, and investment in public transit and autonomous vehicle testing are shaping future vehicle usage and market dynamics.
In the following, we highlight the three most critical usage trend developments. Download the complete list of all 75 trends, affecting the automotive industry 2026+.
Autonomous Fleet-as-a-Service (FaaS)
Current Situation: Autonomous driving technology is in the advanced testing phase, with various levels of autonomy (L2 to L4) in commercial and personal vehicles. FaaS models are being explored by companies like Waymo and Cruise.
Expected Business Development: Over the next 6-10 years, full-scale autonomous fleets are expected to be operational, especially in urban areas with advanced infrastructure for autonomous systems.
Challenges: Regulatory hurdles, public acceptance, complex AI algorithms, urban infrastructure adaptation, and liability concerns.
Time to Maximum Relevance: 8-10 years
Potential Impact: High
STEEP Segment: Economic
This year’s trend development
Growing Demand for Renewable Energy in EV Charging
Current Situation: As electric vehicles become more popular, there is increasing demand to power them with renewable energy rather than fossil fuels. Consumers and governments alike are pushing for cleaner energy sources for EV charging to maximize the environmental benefits of electric vehicles.
Expected Business Development: Charging infrastructure powered by renewable energy, such as solar or wind, will become more widespread, with governments incentivizing the development of green charging networks. OEMs may partner with energy companies to offer renewable energy packages to EV owners.
Challenges: The rollout of renewable energy-powered charging stations is slower than the growth in EV adoption, and the cost of developing these networks can be high. Additionally, ensuring a consistent supply of renewable energy in all regions remains a challenge.
Time to Maximum Relevance: 3-6 years
Potential Impact: High
STEEP Segment: Ecological
This year's trend development
Advancements in Vehicle-to-Everything (V2X) Connectivity
Current Situation: V2X technology, which allows vehicles to communicate with each other, road infrastructure, and other devices, is being developed to improve road safety and traffic management. V2X can enable smoother traffic flow, reduce accidents, and provide real-time information to drivers.
Expected Business Development: As cities and road systems adopt smart infrastructure, V2X technology will become more prevalent in modern vehicles. OEMs will incorporate V2X communication capabilities to enhance vehicle safety and support the development of autonomous driving.
Challenges: Widespread V2X adoption requires significant investment in infrastructure, including smart traffic lights, sensors, and connected roads. Ensuring interoperability between different vehicle brands and systems is another challenge.
Time to Maximum Relevance: 3-6 years
Potential Impact: High
STEEP Segment: Technological
This year's trend development
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