Only 5% of carmakers will maintain AI focus by 2029

Only a handful of automotive companies are likely to sustain ambitious artificial intelligence investment in the coming years, a study released on Monday showed, raising doubts over whether current industry "euphoria" will deliver lasting benefits.

By 2029, just 5% of automakers will maintain strong AI investment growth, down from over 95% today, technology research firm Gartner said in its report on 2026 predictions for the sector.

The study found that only carmakers with strong software foundations, tech-savvy leadership and "a consistent very long-term focus on AI" are expected to pull ahead, potentially deepening a competitive AI divide.

Volkswagen and other legacy manufacturers, long known for engineering rather than software skills, are battling to catch up with new tech-driven rivals such as Tesla and BYD.

Many legacy automakers are trying, but internal obstacles and outdated mindsets hold them back, Gartner analyst Pedro Pacheco told Reuters.

Success requires companies to become "digital-first" organisations, eliminating internal obstacles and prioritising technology at the highest levels, including direct reporting lines of software leaders to CEOs, Pacheco said.

"A company that is not great at software ... is going inevitably to struggle," he added.

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