Dramatic automotive industry shift creates winners and losers

The automotive landscape is undergoing its most fundamental transformation since the invention of the assembly line. Electrification, software-defined architecture, artificial intelligence (AI)-driven manufacturing, and new trade barriers are rewriting the market rules. Hyundai, Kia, BYD, SAIC, and Geely are gaining traction at an unprecedented pace.

But the e-mobility players do not lead in profit generation. Toyota and Volkswagen still generate more than twice the earnings before interest, taxes, depreciation, and amortization (EBITDA) of Kia and Hyundai, the most successful Asian e-mobility brands. BMW and Mercedes-Benz generate more earnings to date than Tesla.
Figure 1: Figures are approximate, in US$ billions, full-year 2025. Reported GAAP/IFRS EBITDA is used where companies disclose it directly (Macrotrends). Numbers for Hyundai and Kia EBITDA are estimated from their reported operating profit (Hyundai: 11.47 trillion KRW; Kia: 9.08 trillion KRW). Volkswagen's figure includes its large financial services leasing division. Stellantis posted negative EBITDA after large impairment and restructuring charges.

But there are dramatic developments. Stellantis, the group that owns 17 automotive brands, including Fiat, Chrysler, PSA, and Opel, posted a dramatic one-off net loss of $26.3 billion US due to a major strategic shift toward electrification.

Tesla's margins also declined from their peak in 2022 because of a global price war in an increasingly red ocean. The e-mobility pioneer sold 1.6 million units in 2025, 8% less than the year before, and price cuts dragged residual values down. Yet, Tesla still holds a market capitalization of roughly $1.585 trillion US—more than six times the total capital value of Toyota, the largest manufacturer in the world.

The Chinese manufacturers are earning far less. The largest, BYD, still falls short of $10 billion US. For now, its balance sheet remains hampered by an aggressive land-grab strategy and steep investments in technology leadership.

True leadership remains a decisive dimension

Financial data captures what has happened. Leadership determines what happens next.

Leaders have always written their own chapter

Strong leadership has driven winners throughout more than a century of automotive history. Henry Ford defined mass manufacturing and turned employees into customers by granting them very high wages. Alfred P. Sloan oversaw 30 years of growth at General Motors and introduced new concepts like annual model changes, brand architecture, and planned obsolescence. Lee Iacocca, the father of the legendary Ford Mustang, rescued Chrysler from bankruptcy and cut his own salary to $1. When Henry II took over Ford, the company lost $10 million US a month. He brought in the “Whiz Kids” to the rescue. Ferdinand Piëch transformed Audi into a premium brand and engineered Volkswagen's acquisition of Lamborghini, Bentley, and Bugatti. Alan Mulally's “One Ford” plan kept Ford out of the 2008 government bailout. Carlos Ghosn turned the fledgling Renault around and took over Nissan. Sergio Marchionne rescued Chrysler from collapse and merged it with Fiat into one of the world's largest automakers.

A cautionary tale, and a starker warning

BMW's recent 40% drop in market cap looks surprising given its solid fundamentals, including strong earnings, high margins, and a genuinely strong product lineup. Oliver Zipse took a major risk that will shape the business for years to come by executing the focused and well-timed market entry of the fully electrified iX3, replacing the highly successful 3 Series volume model. The successful transformation has led to long waiting lists for this premium-priced new model. Still, when he stepped down, the new, unknown Chief Executive Officer (CEO) was introduced alongside an unexpected profit warning that sent the share price spiraling down.

Volkswagen has been hit worse. Six senior managers rated their own company´s prospects as poor in an anonymous survey. With this loss of faith came the dramatic announcement that 100,000 jobs are in danger. Publicly banking the entire company on e-mobility before the traditional German brand could compete in this sector has not paid off.

Another leader who moved boldly into electrification is Antonio Filosa, with his costly program to reset the entire Stellantis conglomerate at once. Whether this risky bet will pay off depends on the capability of his new leadership team.

Leaders still write automotive history today

A different kind of automotive leadership stands out sharply in the European luxury car segment. Here are the current leaders who are writing the next chapter for their respective companies:

• Mate Rimac founded a company in a garage in Zagreb that became the technological backbone of some of the world's most revered performance brands. His vision was not limited to producing electric cars, but to proving that electrification could be a very exciting chapter in automotive racing and passion. Rimac has just completed the takeover of Bugatti.
  
• Benedetto Vigna arrived at Ferrari with a physicist's mind and a contrarian's instinct. Ferrari does not sell transport—it sells permanence, desire, and myth. One of his most delicate challenges is to thread electrification through that identity without sacrificing pricing power. Ferrari still profits from very long waiting lists for almost every model and maintains the highest industry margin per car produced.
  
• Adrian Hallmark at Aston Martin Lagonda is turning around one of the world's most renowned luxury nameplates. His toughest challenge is not to lose the customers who define the brand through the transformation. The unhurried, cautious, and well-executed approach he is taking to modernize the manufacturing of iconic cars starkly contrasts with the panic-driven platform pivots that have destabilized larger rivals.

These are exemplary tales of leaders calmly executing while the industry around them argues about which direction is north.

Strategic imperatives for established OEMs

Incumbents still hold the financial advantage. Sustaining it requires action. Leadership conviction and a clear focus on priorities will separate tomorrow's leaders.

1. Master software-defined vehicle architecture

Software is the new horsepower. The original equipment manufacturer (OEM) that defines the dominant vehicle operating system owns the recurring revenue model, the over-the-air update relationship, and the digital services layer that will increasingly differentiate vehicle value.

2. Industrialize AI across manufacturing and operations

AI-driven manufacturing is a current differentiator, not a future state. Manufacturers already using AI for predictive maintenance, real-time scheduling, and quality-drift detection are compounding advantages that will be difficult to reverse.

3. Simplify platforms and accelerate decision cycles

Asian OEMs scale faster partly because they run fewer platforms and variants, and have faster decision cycles. Western OEMs have accumulated structural complexity that drives up cost, extends development timelines, and slows the response times the current environment demands.

4. Protect premium margins through brand stewardship

Brand power remains the most durable advantage available to established OEMs. Pricing power follows brand power; margin follows pricing power. That chain must be actively defended through a transition that reinforces brand identity and avoids the volume-driven margin erosion in premium segments. Continuous investment in innovation, heritage, and service dimensions that price-aggressive competitors cannot easily replicate remains key.

AI in automotive: Practical deployment has started

The gap between AI's potential and its delivery is closed by governance and execution discipline. AI is not a silver bullet. It amplifies the condition of the existing business, for better or worse—clean data and sound processes are prerequisites, not afterthoughts. Lights-out factories are not the near-term destination. The most effective deployment model positions AI as an expert collaborator, augmenting human judgment rather than replacing it.

Where measurable value is being generated now

On the shop floor, AI correlates sensor data, inline test results, operator variables, and supplier inputs to identify quality drift before it becomes a defect, while real-time manufacturing execution system (MES) data replaces static production scheduling. In supply chains, AI-driven scenario analysis enables automatic identification of alternative suppliers and inventory options when disruption hits, with human oversight retained for the final call. In finance, AI agents monitor performance over a period—not just at close—so teams can course-correct in real time rather than reacting to lagging indicators.

A practical deployment framework

1. Start with the business problem, not the technology. The right question is not “what are our AI use cases?” but “what problems can we not currently solve?”
   
   
2. Prioritize data-confident use cases first—build on data sets you can trust and audit before tackling high-complexity integrations.
   
   
3. Keep the human in the loop for risk management and adoption. Users who experience AI as a tool that makes their work more meaningful become the organization's best source of the next use case.
   
   
4. Deliver in sub-90-day cycles. Avoid 18-month projects with uncertain outcomes. Ship the first use case in six to eight weeks and let production deployments compound through the year.

For a deeper dive into practical ways to adopt AI in automotive, watch our webinar: Reality vs Hype How Can Automotive Manufacturers Achieve Measurable Outcomes Fast with AI?

The time to focus on leadership is now

Established OEMs still own formidable advantages: a global supply chain, proven manufacturing capability, global distribution, and brand equity built over decades.

The competitive threat is real. Asian OEMs are advancing on cost, software, and electric vehicle (EV) architecture simultaneously. Chinese manufacturers continue to pour capital into batteries, software, and international expansion, intensifying the pressure on established global players.

The companies that emerge strongest from this decade will combine today's financial strength with technological agility and a sharp focus on winning in their chosen segments. Without strong leadership, clear strategy, and decisive, well-timed execution, any competitive position held today will erode.