The automotive industry is undergoing through a challenging and transitional phase post Covid-19. The pandemic halted all supply chains, which eventually benefited the Chinese automotive brands with large supply stocks at their outlets. Post pandemic supply chain issues and semiconductor shortages have added to established automotive manufacturers misery. With the global emission already on the red flag and net zero timeline effecting the automotive manufacturers are in a dilemma whether they stick to the naturally aspirated (NA) gasoline engines or shift to the electric vehicles (EV).
The battery capacity and range issues of EV has added to consumer’s range anxiety while driving, which has also become a factor of consideration before buying a car. The lack of or inefficient charging infrastructure in most countries has caused a stagnation in the consumer demand for EVs. Recent sales figures show that majority of manufactures are not happy with the sales number of EVs, even though some countries have subsidised the tax for renewable energy products including EVs.
Alternatively, hybrids, although they have been in the market for long time have been smartly used by major Japanese brands who were once criticised for their slow move towards full electrification, are now being praised for their pragmatism. Hybrids have emerged as the dominant alternative to diesel and EVs. Governments in most parts of the world have not subsidised hybrids vehicles as EVs, but hybrids have generated good sales volume and interest. Manufacturers are also following a middle path in the Plug in Hybrid Electric Vehicle (PHEV) versions of their models to capture the largest possible slice of the market pie during this extended transition.
To combat these rapid shifts, the industry is moving towards a state of collaboration. A primary example is Sony Honda Mobility (SHM), which seeks to blend consumer electronics with automotive hardware. However, even larger shifts are occurring like Stellantis, the group that manages 14 brands including Fiat and Peugeot, after a difficult 2025, has initiated a major business reset. They are offering multi-energy platforms that can host Internal Combustion Engines (ICE), hybrid or electric powertrains depending on local demand.
Even after the collapse of their previous merger talks, Honda and Nissan with Mitsubishi have moved to tighten their alliance. For years these brands were fierce competitors, but the staggering financial cost of developing software-defined vehicles has forced them into a ‘Sink or Swim’ partnership. By pooling their R & D budgets and standardising software, they are trying to build a collective defence against a high-tech competition that moves faster than a traditional automobile manufacturer ever could.
Hyundai’s massive 80% stake in Boston Dynamics is a clear signal that the world’s biggest car makers are identifying the crisis. By integrating robotics and AI into their core business, they are hunting for new avenues for revenue generation that doesn’t depend on the traditional automobile sales.
Established auto makers are under immense pressure from the competition provided by Chinese brands, providing tech-heavy cars at budget price. While established auto makers were forced to hike prices following the pandemic driven by chip shortage and supply chain issues, price-conscious buyers are now jumping ship and defecting to these more affordable Chinese alternatives.
Global trade and tariff remains a massive headache for the industry. Even though a February 2026 Supreme Court ruling in the US cleared some tariff -related hurdles, expensive duties on steel and auto parts haven’t budged. This creates a foggy regulatory environment that leaves brands with American production lines carrying a heavy financial burden.
With all the technological transformation, adaptation of most available technology, inflationary and supply chain issues, the road forward for the automobile industry at present is bumpy, steep and foggy, but it definitely offers opportunities for innovation.
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