The Automotive Industry in 2025: Key Focus Areas and Trends

More than 12% of consumers who financed a new car in June of 2022 had a monthly payment of $1,000 or more. It’s clear that a select subset of today’s consumers are willing to pay for high-end automobiles. Power say that sales of cars worth more than $100k were outselling lower-priced cars 3 to 1 in the first quarter of 2022. The market for FCEVs is expected to grow at a remarkable CAGR of nearly 70%, through 2026.

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Seamless connectivity between automobiles, infrastructure, and pedestrians is expected to become commonplace and help increase traffic safety and improve driver experience. Since we’ve already explored the use of AI in the auto industry, it makes perfect sense to discuss connected cars, which are undoubtedly one of the top trends for the future. Connected cars are equipped with cutting-edge technology that allows them to connect to the Internet, other vehicles, and external software. These cars offer numerous benefits, not just for drivers and manufacturers, but also for passengers and the environment.

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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.

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The startup also offers META, a compact shuttle for urban mobility; and SPACE for passenger transportation. These vehicles use a re-assembly factory model, which allows upgrades and updates to extend their lifecycle. Moreover, lightweight and bio-based materials are used to reduce vehicle weight and improve fuel efficiency, which aligns with sustainability goals.

• However, that number is smaller than it was in 2019 when more than 80% of people commuted by car.
• By the end of that decade, it’s predicted that over 30% of the cars on the road will be EVs.
• These all-inclusive options reduce the financial burdens of ownership, especially for urban users.
• This comes as China continues to make their presence known in the global EV scene, with ramped-up production and dominance in the international EV market.
• Probably the most important trend in the automotive industry is the worldwide shift to electric vehicles (EVs).
• Companies like Toyota and Hyundai are investing in hydrogen fuel cell technology.

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Hydrogen-powered vehicles produce only water vapor as a byproduct, making them a strong contender for sectors that are harder to electrify, such as long-haul trucking and commercial transportation. This move highlights the industry’s broader trend of building resilient supply chains to safeguard against geopolitical and economic uncertainties. Global supply chain disruptions over recent years have prompted manufacturers to rethink strategies.

consumer trends

The adoption of augmented reality (AR) in head-up displays and automated parking systems is expanding, which is advancing ADAS technologies. The global ADAS market is projected to reach USD 36.6 billion by 2025, with a CAGR of 10.8% from 2025 to 2037. Companies like Nvidia innovate in AI-powered chips for AVs, partnering with automakers like Toyota, Tesla, and Aurora Innovation to enhance autonomous capabilities. North America led the AV market in 2024 with over 40% revenue share, while Asia-Pacific is the fastest-growing region, with an expected CAGR of 35% from 2024 to 2033. Level 3 (conditional automation) and Level 4 (high automation) systems are gaining traction, with broader availability expected in Europe and North America by 2025. Tangram Vision allows perception teams to focus on product-specific features by handling complex sensor tasks and accelerating development and deployment processes.

The rising preference for pre-owned/used cars

Governments also enforce stricter safety standards, pushing automakers to integrate advanced sensor systems. Further, sensor fusion systems incorporate AI and machine learning (ML) algorithms to enhance optimization, predictive maintenance, and decision-making. With a CAGR of 25.5% from 2025 to 2037, the global sensor fusion market is expected to reach USD 7.91 billion by 2025. The automotive cybersecurity market is projected to reach USD 5.11 billion in 2025, with a CAGR of 18.14% from 2024 to 2034. Specific components like silicon carbide (SiC) and gallium nitride (GaN) power devices are expected to see growth, offering up to 60% improved efficiency over traditional silicon components. Jaguar Land Rover’s “Reimagine” strategy has cemented its position as a sustainability leader.

OEMs are juggling more regulations with fluctuating demands and ongoing chip shortages

Increased government focus on charging networks will be needed to support the expanding EV fleet. The autonomous vehicle sector will advance as UN regulators lift their speed limit. In the United States, the newly appointed administration has issued several executive orders that will likely have drastic impacts on both global and national automotive markets. One such order significantly impacts the future of EVs and EV infrastructure by rolling back policies that once supported their growth. It eliminates mandates that favour EVs, emphasising consumer choice and opposing regulations that make gasoline-powered vehicles less accessible.

• The USMCA requires 75% of motor industry components to be produced in North America.
• Even with this rapid growth, EV’s share of cars on the road is expected to remain at just 8% by 2030.
• Moi uses continuous fiber manufacturing (CFM) technology, robotic intelligence, and digital fabrication to deposit fibers.
• German startup ChargeX offers a modular EV charging solution that converts parking spaces into charging stations.
• Users discover the nearest Beam scooter on the app and park it in visible public spots after the ride.
• The inherent flexibility of electric powertrains is enabling automakers to reimagine vehicle design, resulting in lighter, more efficient vehicles.
• In 2024, the automotive industry experienced significant transformations, with advancements in electric vehicles (EVs), autonomous driving technologies, and shifts in global markets.

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In addition, Move-X supports over-the-air updates, ensures continuous improvement of system performance, and allows customization across diverse use cases. Moreover, its NuPort solution extends reliability by enabling connections between automotive components that support both diagnostics and long-term endurance. Its solution, carSECURITY, provides organizations with a complete cybersecurity process landscape. It integrates templates, examples, and practices aligned with ISO/SAE 21434, Automotive SPICE for Cybersecurity, and VDA guidelines.

• However, overcoming supply chain challenges takes time, so they are likely to remain in 2025.
• This AI in Automotive Market Report examines the trends and technologies driving vehicle intelligence, operational efficiency, safety advancement, and data-driven mobility innovation.
• This is fueled by increased vehicle production and sales in China, Japan, and South Korea.
• This is not just a European problem with Volkswagen and Stellantis, as Honda and Nissan merge, and Ford and General Motors struggle.
• The automotive industry is gearing up for a transformation as fast and furious as the iconic franchise suggests.
• Using data from IoT technology, drivers receive real-time route suggestions to avoid traffic jams and ease congestion, ensuring faster, stress-free travel.
• The region’s substantial market share results from government incentives and the growth of the automobile industry.

Discover all Automotive Technologies & Startups

The global automotive industry, responsible for 10% of the world’s carbon dioxide emissions, faces ongoing pressure to overhaul its practices. However, the landscape is proving difficult to steady with an intricate maze of regulations that differ by country or region and lack a unified benchmarking process for sustainability. The SAE, originally the Society of Automotive Engineers, has identified six levels of automation on the path to completely autonomous vehicles.

We don’t just regurgitate press releases—we road-trip, wrench, code, and occasionally sleep in dealership parking lots to bring you unfiltered truth. Our proprietary data blends EPA fuel-economy dumps, NHTSA complaint logs, insurance quote engines, and Reddit sentiment (yes, really). The final trend, and one which has been subject to a lot of attention (and hype), is driverless transportation.

Subsidies and incentives for EVs are also under scrutiny, with plans to reconsider or eliminate government-imposed market advantages that favour them. Crucially, the order halts federal funding for EV infrastructure projects, such as charging station programs, until they align with the administration’s policy goals. Additionally, looking at supply chains, AI and machine learning are driving the rise of autonomous logistics systems that can self-optimise routing, scheduling, and inventory management. These systems aim to minimise human intervention, improve decision-making, and enhance overall efficiency, paving the way for smarter supply chain operations. In Latin America, much like other regions, the electrified vehicle fleet is still only a small share of the total vehicle fleet; however, that share is growing. 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.

Whilst the U.S. may be bucking it, there is certainly a global trend towards a data driven auto lending decisions more sustainability-forward manufacturing scene. However, as with all complex bodies of rulesets, differing rules and regulatory mandates across the globe make it easier for international automakers to fall foul of compliance. Ransomware-related costs in the automotive industry skyrocketed from $74.7 million to $209.6 million in just the first half of 2023. System downtime caused by these attacks reached $1.99 billion, compared to $1.3 billion in 2021. AI, automation, and an ‘electric-first’ mindset are impacting every industry, and automotive is no exception.

They play pivotal roles in guiding self-driving cars, managing fleets, enhancing driver safety, and refining services such as vehicle inspections and insurance. Autonomous vehicles (AVs) are advancing transportation by minimizing the need for human drivers and enhancing last-mile delivery efficiency. These vehicles improve public transport safety by reducing accidents caused by human error. LiDAR sensors enable precise 3D mapping, crucial for vehicle navigation and obstacle detection. AI algorithms process vast data from sensors and cameras, enhancing decision-making for safe, efficient driving. French startup Airnity provides a cellular connectivity platform for the automotive industry to enhance connected car operations.

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This article highlights the company’s strides in electrification, material innovation, and circular economy practices. Notable achievements in 2024 include significant progress in reducing emissions and advancing transparent ESG reporting. As net-zero targets become the norm, the reliance on renewable energy is only set to grow. Exciting developments in energy storage and green hydrogen technologies promise to redefine production processes further.

• Volvo Cars has announced plans to adopt large aluminium castings for its next-generation electric vehicles, aiming to simplify production and enhance sustainability.
• Through V2X, vehicles can share information about road conditions, accidents, and traffic patterns, allowing for real-time decision-making.
• This process enables us to identify the most impactful and innovative trends in the automobile industry.
• This article profiles the top five Chinese automotive original equipment manufacturers (OEMs) leading the industry in sales volume and market capitalization.
• Chinese startup Move-X Autonomous Driving offers Level 4 autonomous driving through integrated vehicle platforms designed for commercial deployment.

Methodology: How We Created the Automobile Trend Report

Here’s how TikTok unboxings and gaming are driving one of 2025’s top retail trends. Data from the past 10 years shows the sale of luxury vehicles making a steep climb in 2022. Toyota’s Mirai and Hyundai’s Nexo have been the two major players in the market since sales launched in 2016. Along with an increase in refueling stations, look to see an increase in the variety of FCEVs available to consumers in the coming years. In addition, Hawaii passed a bill in 2022 that will create a hydrogen refueling system rebate for developers. Any infrastructure that’s built after January 1, 2023, and utilizes renewable hydrogen will be eligible for up to $200k.

e.Volution manufactures Sustainable Vehicles

Their scooters use an aviation-grade aluminum frame and are customized for sharing, safety, reliability, and durability. Users discover the nearest Beam scooter on the app and park it in visible public spots after the ride. Further, the micro-mobility platform offers a sustainable alternative to short-distance rides and helps regulate traffic flow in cities.

At the same time, BYD, Stellantis, and Volkswagen are focused on designing a stronger PHEV portfolio. Hyundai plans to ramp up its hybrid offerings under its ‘Hyundai Way’ strategy from seven to 14 models by 2030. Toyota continues to emphasize hybrids as a critical part of its electrification strategy.

This assists the drivers in keeping lanes, prevents collisions, and enables autonomous driving options. Moreover, the solution is customizable to any car model or specific OEM requirements. Additionally, smart virtual assistants are emerging as a key HMI feature, aiding drivers and passengers in interacting with vehicles and external services. The global Automotive Human Machine Interface market, valued at USD 70.41 billion in 2022, is expected to grow significantly, reflecting these advancements in automotive technology. Big data and advanced analytics play a crucial role in decision-making throughout a vehicle’s lifecycle. Vehicle-generated data facilitates predictive maintenance, fleet management, and accident response.

Vehicle Cybersecurity

The startup employs the Perceived Quality Index to eliminate engineering bias by translating customer insights into measurable quality improvements. Cost savings also play a role, as recycled aluminum or bioplastics often return their investment in just over a year. Investors support companies with strong sustainability commitments, channeling funding toward greener production.

This EV Just Set an Efficiency Record

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. MaaS is set to become a key focus for the automotive industry in 2025 as companies look to diversify their business models and create new revenue streams. The drive towards electric and autonomous vehicles is further bolstered by progress in machine learning and IoT. Volvo has adopted megacasting techniques to simplify EV production, reducing the number of components required and streamlining assembly processes. This both lowers costs and improves vehicle performance, addressing both market demands and sustainability goals. Autonomous driving will continue progressing from Level 2+ driver-assist to Level 3 conditional autonomy in geo-fenced areas.

Likewise, projects USD billion in annual software and services revenue by 2030 from connected vehicles. The startup strengthens autonomous driving by providing reliable and production-ready Level 4 vehicles that expand commercial mobility solutions. Semiconductors enhance safety by enabling faster decisions and reducing accident risks. They improve energy efficiency through wide-bandgap devices that extend EV range and minimize charging times. The semiconductors also enable infotainment, voice assistants, and AI-driven interfaces for a better user experience.

Waymo highlights this in its robotaxi fleet, which processes multimodal data to complete over 250K paid rides weekly with high reliability. Tesla’s Full Self-Driving Computer processes high-rate image input, handling camera streams of up to approximately 2.5 billion pixels per second through its camera serial interface. Its image-signal processor manages approximately 1 billion pixels per second from high dynamic range (HDR) sensor inputs. The system combines this data with inputs from multiple cameras and sensors to enable AI-driven perception and decision-making in near-real-time driving scenarios.