Global Automotive Outlook – 2025

The automotive sector is entering a pivotal phase as technology, policy, and consumer preferences converge to reshape value chains and revenue structures. While global light vehicle volumes are expected to reach close to the 90 million units mark in 2026, the modest topline growth conceals profound structural disruptions. Electrification continues to scale unevenly across different regions, Chinese OEMs are expanding aggressively into export markets, vehicle-to-grid (V2G) capability is progressing from pilots to commercial readiness, software-defined vehicles (SDVs) are transforming from hardware products into evolving digital platforms, robotaxi deployments are taking form through strategic partnerships, and generative AI is rapidly embedding itself into both the vehicle and the retail ecosystem. The coming year will reward companies capable of realigning on their product strategy, monetization models, and distribution network.

Forecasts indicate global sales growth alongside rising share of BEVs. However, the market is undergoing a structural rebalancing. BEV growth through 2026 will be particularly in Europe and China, supported by maturing infrastructure, regulation, and consumer confidence. PHEVs continue to maintain relevance in Europe and China as a bridge solution, while HEVs remain strategically important in Japan and selective North American region. SUVs continue to strengthen as the dominant growth segment, particularly compact and mid-size formats, while sedans and hatchbacks show flat growth or decline. Comparatively, MPVs, vans, and pickups show better growth. This vast demands differentiated portfolios and flexible manufacturing systems that accommodate BEV, HEV, and PHEV configurations. For suppliers, modular electrification stacks and adaptable platforms will be critical to mitigate regional volatility and regulatory uncertainty.

China holds the leaders position for BEV & PHEV demand while simultaneously accelerating as the world’s leading exporter, especially of BEVs in Europe. Chinese OEMs are scaling aggressively across Europe, Latin America, and Southeast Asia, with Europe accounting for a significant share of BEV volumes. Competitive advantage stems from manufacturing scale, vertically integrated battery supply chains, and aggressive price positioning. Major OEMs in Europe and the Americas face rising pressure on volumes and profitability. Toregain competitiveness they will need to reinforcing premium positioning through software-led value, and vertical integration. In addition, firm actions are required on accelerating localized manufacturing or strategic joint ventures to overcome tariff exposure; and building differentiated service ecosystems where Chinese brands have limited legacy strength.

V2G capacity and charger deployment projections indicate growth in 2026, particularly in US and China, with AC bidirectional chargers dominating the near term and DC capabilities expanding thereafter. Several OEMs have already introduced models capable of V2H and V2G interactions, marking the transition toward grid-participating vehicles. V2G represents both a resilience mechanism and a value creation angle. For energy systems, it provides flexible load and peak-load capability; for consumers and fleets, it offers potential revenue and ownership cost optimization. The critical barriers lie in regulatory frameworks, tariff structures, interoperability, and warranty implications. Automakers, utilities, and infrastructure providers that collaborate on standardized platforms, billing models, and consumer education will be best positioned to capture early advantage.

Major OEM roadmaps converge on zonal electrical/electronic platforms that enable continuous OTA upgrades, modular service expansion, and recurring monetization models. This transition marks one of the most consequential business-model evolutions in decades. Mastery of software stacks, developer ecosystems, cybersecurity, and data management becomes central to competitiveness. Hardware-centric suppliers risk commoditization, while those enabling integrated SDV platforms will gain strategic relevance. OEMs able to convert vehicles into evolving digital platforms will unlock post-sale value pools, enhanced lifecycle engagement, and differentiated brand stickiness.

Robotaxi projections suggest meaningful but controlled scale by 2026 under favorable regulatory and funding conditions. The dominant pattern is collaboration, where technology developers partnering with mobility service providers to leverage demand pools, operating expertise, and existing user bases. Robotaxis are inherently network-driven businesses where route density, regulatory acceptance, and cost efficiency determine success. Partnerships with established operators reduce political friction, safe deployment, and accelerate commercialization. Automotive stakeholders should prioritize ecosystem alliances over independent strategies.

OEMs are integrating conversational AI and intelligent cockpit assistants across brands, leveraging platforms from technology leaders. These solutions deliver natural interaction, personalization, contextual awareness, and continuous evolution via OTA model enhancements. However, data privacy, driver distraction, latency management, and liability frameworks will shape adoption trajectories. Trust will depend on reliability, transparency, safe design, and regulatory alignment. Companies investing in governance, explainability, and compliance-ready AI systems will hold advantage.

AI is reshaping retail, from discovery to post-sale engagement. Consumers increasingly begin online, many prefer hybrid purchase paths, and virtual showrooms are becoming mainstream. For dealers, AI enhances lead prioritization, pricing intelligence, and remote transaction enablement. Physical dealerships retain importance for experiential touchpoints such as test drives and delivery, while digital ecosystems dominate discovery and qualification. Dealer alignment with OEM digital infrastructure, capability building, and standardized data integration will be critical to sustaining conversion efficiency.

Strategic Implications

OEMs: Accelerate SDV and electrification platforms as core revenue transformations; leverage localization and partnerships to address Chinese competition.

Suppliers: Focus on integrated electrified systems and software-centric value propositions.

Dealers and Mobility Providers: Adopt AI-enabled hybrid retail and operational models.

Conclusion

The 2026 mobility landscape is defined not by a single dominant technology but by the ability to integrate electrification, software, intelligent platforms, and collaborative operating models. Success will favor agile, realistically focused organizations capable of aligning technology leadership with pragmatic commercialization, regulatory coordination, and sustained customer value creation.

Turn Insights Into Action

3X Your Sales Pipeline

Book Demo Now