We long imagined the executive boards of automakers to be wholly absorbed by the shift to electric vehicles. Batteries, cell plants, CO₂ standards — everything seemed to orbit around that topic. But the latest PwC Global Automotive Outlook tells a different story. For decision-makers, another technology has taken the lead, quieter but unmistakably clear, in strategic priorities.
By 2030, the share of automotive supply-chain players already using automotive AI is expected to rise from 47% to 72%. And most importantly, 51% of the respondents name AI as one of the technologies most critical to achieving their objectives, ahead of batteries and electric powertrains (41%) and embedded software connectivity (39%). For PwC, this new hierarchy shows that behind the EV showcase, AI is reshaping the battles to come in the auto industry.
When Automotive AI Surpasses Electric in Priority
On paper, electrification continues to gain ground. Production of electric-vehicle batteries (BEVs) is projected to climb from 18% to 30% of volumes over five years, while traditional internal combustion engines (ICE) would fall from 60% to 41%. In China, the shift is even more pronounced, with BEVs expected to account for 40% of production (versus 29% today) and a thermal ICE share dropping to 29% (versus 43%). Electrification remains a long-term trend, but it is no longer the sole strategic holy grail.
After all, leaders see the decisive lever elsewhere. In the study, 51% of respondents place AI among their key technologies, compared with 41% for electrification. And the share of supply-chain players leveraging AI should jump from 47% today to 72% in 2030. A blunt summary comes from Harald Wimmer, PwC’s Global Automotive Leader, quoted by Fleet News: “The vehicle is no longer defined by the steel leaving the factory; it is increasingly defined by software, digital services and data analytics”. He adds: “As the industry faces heightened competition and technology reshapes the mobility experience, automakers must place their digital strategies front and center if they want to unleash growth.”
How AI Is Spreading Across the Automotive Value Chain
To PwC, AI is not limited to autonomous driving or a handful of infotainment options. Respondents describe a “growing focus on technology” across manufacturing, R&D, the supply chain, sales, and corporate functions. This diffusion across the value chain helps explain why AI is viewed as a critical capability, on par with software engineering. The rise of Advanced Driver Assistance Systems (ADAS) aligns with this: the share of automakers listing ADAS and autonomous driving among their top three revenue sources is expected to rise from 9% today to 24% in 2030.
The report also shows that this tech push comes with a shift in partners and competitors. Almost 46% of respondents now see entrants from adjacent sectors, particularly technology and energy, as a major source of competition in the next five years. And automakers expect that technology firms will replace traditional industrial players as the most important collaboration partners in the same horizon. AI thus pervades several links at once:
- the factories and industrial operations,
- R&D and product development,
- the automotive supply chain,
- sales activities,
- the governance and management functions at headquarters.
Future-Fit Automakers Betting First on AI
Behind these averages, PwC distinguishes a group of automakers deemed “future-fit.” These players stand out first for a much greater tolerance for strategic risk: 80% say they are willing to accept a high level of risk, versus 49% of other companies. They also report being far more advanced in software engineering and AI, 71% versus 45%. They broaden their customer base more readily, 86% versus 71%, and expand their offerings beyond automotive in the strict sense, 72% versus 45%. This attitude aligns with a market landscape that is shifting: fewer than a third (26%) see Western Europe as a major growth market in five years, down from 44% today, while South and Southeast Asia would rise to 45% and 44% respectively from 24% and 31%.
And yet PwC describes an industry still torn between immediate returns and preparations for the future. More than three-quarters of companies (76%) say they allocate capital to the initiatives with the strongest short-term payoff. In practice, nearly 73% of investments in manufacturing and operations are aimed at productivity and efficiency first, and only 12% target growth and market share. All this unfolds amid a talent shortage cited by 51% of respondents and a skills gap deemed insufficient by 45%, even as AI and software are considered key capabilities. To address this, the report recommends defining the business by “domains” rather than as mere vehicle manufacturers, becoming full participants in ecosystems, rethinking capital allocation to fund options whose returns aren’t yet visible, and thinking like a technology company that looks beyond the product. Harald Wimmer sums it up: “Automotive leaders understand the disruption underway—from software to AI and energy—but their ability to act decisively is hampered by governance anchored in inherited priorities”. And he warns: “To succeed, automakers must evolve governance to balance capital discipline with the agility and strategic options necessary to fund the next wave of innovation”.
