The global automotive industry is entering an unprecedented phase of structural transformation. The reshaping of the trade order due to the competition for dominance between the U.S. and China, the strengthening of protectionism, the divergence of environmentally friendly policy lines, and the rapid advancement of artificial intelligence (AI) and robotics technologies are all intertwined, shaking up the entire industrial landscape.

The Korea Automotive Technology Institute (KATECH) predicted in a recently published special issue on industry analysis that changes in the global automotive industry will face a full-scale test starting in 2026.

The report presented the key issues for the automotive industry in 2026 from five perspectives: autonomous driving and robotics, eco-friendliness of powertrains, software-defined vehicles (SDV) and user experience (UX), automotive market dynamics, and global key component supply.

A common characteristic is that while the pace of technological advancement is accelerating, the pressure to verify commercial viability and profitability is increasing.

In the field of autonomous driving, the 'end-to-end (E2E)' approach is effectively converging as a technological alternative.

The E2E approach, which processes everything from perception to control using a single AI model based on vast driving data, is evaluated as having excellent scalability at the advanced stage.

Accordingly, competition is intensifying between open strategies of allying with Big Tech and closed strategies of building their own ecosystems.

The leapfrog strategy for robotaxi led by Tesla and the gradual commercialization of Level 3 (L3) autonomous driving spreading, centered on China, are also expected to enter a phase of performance verification around 2026.

The field of robotics, coupled with autonomous driving technology, is also drawing attention. While automobiles and robots share similar perception, judgment, and control structures, creating significant technological synergy, the economic viability and scope of application for robots, such as humanoids, are still limited.

Accordingly, the analysis suggests that there is a high possibility of a 'Big Blur' phenomenon occurring in the short term, where expectations and skepticism intersect.

In terms of powertrains, there is a shift away from the sole dominance of battery electric vehicles (BEVs), with various eco-friendly alternatives such as hybrids (HEV, PHEV, EREV) emerging.

As policy uncertainty and consumer burdens increase, demand for relatively low-risk hybrids is expanding, and technological competition among Chinese automakers is also stimulating this trend.

In the medium and large commercial vehicle sector, the transition to BEVs based on megawatt (MW) charging technology is expected to be put to the test.

In the battery sector, while the proportion of LFP batteries is increasing due to their superior price-to-performance ratio, it appears that full-scale commercialization of innovative technologies such as solid-state batteries will still require time.

While the transition to SDV continues, monetization remains a challenge. However, continuous feature improvements via OTA (Over-the-Air) updates and the ability to respond to recalls have established themselves as important criteria for consumer choice.

With generative AI-based voice assistants emerging as a key competitive factor in in-vehicle interfaces, a structure is forming where the level of SDV transition determines the upper limit of the user experience.

The trends in the finished vehicle market also differ distinctly by region. In the U.S., premium and entry-level niche strategies coexist amidst consumption polarization, while Europe is seeking a breakthrough centered on small, low-cost electric vehicles.

Amid slowing growth, China is shifting its focus from price competition to competition over quality and brand.

In terms of global sales volume, the three-way dominance of Toyota, Volkswagen, and Hyundai Motor Group is expected to continue, but changes in the rankings of Chinese and Indian companies are anticipated within the top 10.

Meanwhile, the supply and demand imbalance of memory semiconductors caused by the AI craze and escalating geopolitical tensions are other variables for the automotive industry.

Supply chain risks are expected to persist in sectors highly dependent on China, such as automotive semiconductors, secondary battery materials, and rare earth elements.

KATECH assessed that “2026 will be a turning point to gauge whether technological progress can lead to actual markets and profits, rather than the progress itself,” and that “the entire automotive industry has entered a period where it is required to make choices and focus.”