Automakers face Chinese competition, AI integration: Gartner
China’s pace of innovation, simultaneously managing the integration of artificial intelligence (AI), cybersecurity risks, and the complex transition to electric vehicles (EVs), will be major challenges for global carmakers in 2026, says consultancy Gartner, Inc.
The global automotive industry has entered 2026 in an environment of increasing uncertainty, with long-term predictability giving way to volatility. “Beyond 2025, marked by profit warnings, tariff shocks, and slower-than-expected adoption of EVs, the scale and long-term planning are becoming irrelevant due to geopolitical tensions, supply chain instability, and rapid technological change,” the organisation notes.
While many manufacturers see AI as a path to greater agility, Gartner warns of a looming reality check as companies realise their current AI capabilities offer less of a competitive advantage than expected, Kallanish notes.
“The automotive sector is going through a period of euphoria regarding AI, where many companies want to achieve disruptive value even before building solid foundations in artificial intelligence,” says Gartner vice president Pedro Pacheco. “This euphoria will eventually turn into disappointment, as these organisations will not be able to achieve the ambitious goals they have set for AI.”
“China will remain the most complex and crucial market, with experts arguing that success there increasingly determines global leadership,” the consultancy observes. “Strategies such as ‘Made in China, for China’, adopted by groups like Volkswagen and Audi, could become a model for others. Electric vehicles are expected to confidently enter the mainstream in Europe as battery costs fall and smaller, more affordable models emerge, supported by renewed incentives in markets like Germany.”
At the same time, most automakers will reconsider their supply chain reliance on China, even if deep technological interdependence makes complete decoupling unrealistic. Under these circumstances, Gartner concludes that the winners in 2026 will not be large companies, but rather those with agility, speed, and organisational adaptability.
