New Technologies Are Putting the Car Industry to the Test

The global automotive industry is in the midst of one of the most profound transformations in its history. Driven by the rise of alternative powertrains, software-defined vehicles, and shifting consumer expectations, the sector is facing far-reaching changes that are reshaping how cars are designed, built, sold, and used. According to the findings of the 24th KPMG Global Automotive Executive Survey, this transition brings both unprecedented opportunities and significant challenges, and established players must act decisively if they are to maintain their position in a rapidly evolving landscape.

The survey gathered insights from more than 1,000 senior executives across 30 countries, offering a clear picture of how leaders view the road ahead.

A Period of Upheaval and Uncertainty

The shift toward electrification, connectivity, and autonomous driving is creating a convergence between the automotive and technology sectors. While this opens up new possibilities for innovation and growth, it also introduces high levels of risk and complexity. Traditional manufacturers are no longer competing only with each other; they now face competition from tech giants, new mobility providers, and emerging brands from across the globe.

Despite the potential of these new technologies, industry leaders are taking a more cautious view of the future than in previous years. Only 34% of executives worldwide say they are confident that profitability will improve over the next five years, down from 41% just one year ago. In Germany, the outlook is even more guarded: just 16% of decision-makers expect profits to rise in the same period.

A key reason for this caution is uncertainty over whether massive investments in electric mobility will deliver the expected returns, combined with concerns about shifting market shares and the speed of regulatory change. As Dr. Andreas Ries, Partner and Global & Germany Head of Automotive at KPMG, notes:

“Focusing on regional differences is becoming increasingly important. This includes customer preferences for drive systems and software applications, but also supply bottlenecks and security of supply. The existing trend toward nearshoring will be further intensified in this context.”

Supply Chains: More Stable, But Still a Priority

One positive development highlighted in the survey is the improvement in supply chain resilience. Concerns over access to critical resources, including fossil fuels, lithium, cobalt, nickel, rare earth elements, and semiconductors, have eased significantly. Today, only 49% of global executives list supply security as a major worry, compared to much higher levels in recent years. In Germany, the decline in these concerns is even more pronounced, indicating that manufacturers have successfully diversified their supplier bases and built more robust logistics networks.

Similarly, worries about the impact of changing trade rules and regulations have also decreased, giving companies greater confidence to plan for the long term.

Diversifying the Path to Electrification

While electric vehicles (EVs) remain a central focus, the survey shows that the industry is taking a more balanced approach to investment. Executives predict that by 2030, electric vehicles will account for just 30% of new car sales across Europe, meaning other powertrain options will remain relevant for years to come.

As a result, companies are spreading their research and development spending:

• 70% of executives say investment in battery-electric vehicles will continue to grow (only slightly down from 72% last year).

• Hybrid technologies are receiving increased attention, offering a bridge between combustion engines and full electrification.

• Funding for traditional internal combustion engines (ICE) is being gradually reduced, reflecting the long-term shift toward lower-emission mobility.

Geographically, leaders expect China to hold the largest global share of battery-electric vehicles, followed by the United States and Japan.

Shifting Market Leadership

The competitive landscape is also being redrawn. According to the survey:

• Tesla remains the clear leader in both the global and European EV markets, with BMW and Audi trailing in second and third place.

• BYD is rapidly expanding its presence in the German market, where it now ranks as the second-largest EV brand behind Tesla, overtaking many established domestic manufacturers.

• Apple has made a notable jump in the Western European market rankings, suggesting that the technology giant is seen as a serious future contender in the automotive sector.

This shift signals a broader trend: success in the future will depend less on legacy manufacturing expertise and more on software, battery technology, and digital services.

Charging Infrastructure: A Critical Race

As EV adoption grows, the availability and quality of charging infrastructure are becoming make-or-break factors. The survey finds that 19% of executives expect charging networks to be owned and operated primarily by dedicated infrastructure providers and energy companies, a view shared equally in global and German markets.

Consumer expectations are also rising sharply. In Germany, 75% of managers report that customers now demand the ability to charge an EV to 80% in 30 minutes or less, up from just 42% one year ago. Meeting this demand will require massive investment in faster, more reliable charging technology across all regions.

The End of the Traditional Dealership Model

The way cars are sold is undergoing a major transformation. Only 31% of executives worldwide believe that traditional brick-and-mortar dealerships will remain the dominant sales channel by 2030, a figure almost identical in Germany. Instead, the industry is moving toward digital platforms, direct-to-customer sales, and online purchasing experiences, driven by changing consumer habits and the growing preference for transparent, convenient transactions.

Artificial Intelligence: The New Engine of Progress

Artificial intelligence is emerging as a core technology for the future of the industry. It is expected to play a key role in autonomous driving, vehicle connectivity, predictive maintenance, and manufacturing efficiency. This shift is already creating a demand for new skills: 25% of global executives and 34% in Germany say that AI software engineers will be among the most sought-after roles in their companies in the coming years.

Tech Companies: Partners, Competitors, or Both?

Perhaps the most significant long-term change is the blurring of lines between automakers and technology firms. The survey describes a new dynamic of “frenemies” companies that cooperate in some areas while competing fiercely in others.

When it comes to capturing new revenue streams from digital services and software, traditional automakers are seen as best positioned to lead, followed closely by major tech players such as Google and Apple. Many executives believe these companies will eventually launch their own vehicles, an event that could mark a turning point in the industry’s history.

In the race for software and autonomous driving leadership, Tesla remains the undisputed front-runner, with technology companies and a small group of forward-thinking OEMs following behind.

Conclusion

The KPMG survey makes clear that the automotive industry is entering a period of profound and lasting change. Profitability pressures, rapid technological shifts, and the arrival of new competitors mean that past success is no guarantee of future survival. The companies that will thrive in this new era are those that remain flexible, invest strategically across multiple technologies, build resilient supply chains, and embrace the convergence of mobility and digital services.