Only a few automakers will keep up strong AI investment in automotive past 2029. According to a new Gartner report, just 5% will maintain robust AI growth by then—down from over 95% today. As a result, many question whether today’s AI “euphoria” will lead to real, lasting innovation.
Looking deeper, Gartner’s 2026 automotive outlook reveals a growing divide. Specifically, the winners will share three key traits: strong software foundations, tech-savvy leadership, and a long-term AI commitment. Consequently, these companies are expected to pull far ahead of their peers.
On the other hand, legacy automakers like Volkswagen face serious challenges. Historically, they built success on mechanical engineering—not software. Now, they are racing to catch up with Tesla and BYD. Unlike traditional players, these rivals design vehicles around software and AI from day one.
Although many established carmakers are trying to adapt, they face major internal roadblocks. For instance, siloed departments and outdated mindsets slow progress. In fact, Gartner analyst Pedro Pacheco told Reuters, “A company that is not great at software is going inevitably to struggle.”
Therefore, success demands a full shift to a digital-first culture. This means breaking down internal barriers. It also requires giving software leaders direct reporting lines to the CEO. Otherwise, AI efforts will remain fragmented and ineffective.
By contrast, Tesla and BYD have integrated software into their core operations. Their vehicles receive over-the-air updates. They also use AI for driver assistance and real-time data collection. Because of this, they hold a clear advantage as AI becomes essential to next-gen mobility.
Furthermore, investors and consumers are starting to notice the gap. Brands that fail to offer intelligent, connected features risk losing market share. Indeed, they may fall behind not only EV startups but also tech giants entering the automotive space.
Looking ahead, the next two years will be decisive. Automakers must decide whether AI investment in automotive is a short-term trend or a strategic priority. Those who treat it as the latter—and act boldly—could shape the future of transportation. Meanwhile, others may fade into irrelevance.
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