2025 & Beyond: Transforming the Automotive Industry with AI-Powered IT Solutions
Key Takeaways:
- AI adoption is growing across vehicles and supply chains
- AI enhances safety, efficiency, and profitability in fleet operations
- Key concerns around safety, data security, and system integration should be addressed
- A phased, expert-led approach is the best way forward
Since GPS, Bluetooth and parking cameras became commonplace on cars in the 2000s, technology has gradually assumed an increasingly dominant role in the automotive industry.
Since then, we’ve seen companies like Tesla lead the way with tech-led electric vehicles (EVs), with features like over-the-air updates and Autopilot, that the rest of the industry has had to work hard to keep up with and surpass.
And now, with the growth of AI agents and generative AI, alongside related technologies such as 5G and the Internet of Things, vehicles are becoming smarter and more efficient all the time. Around one quarter of new vehicles globally already feature some form of AI-driven automation, and this figure is only likely to rise through 2025 and beyond.
In this blog, we’ll explore how AI benefits in the Automotive Industry are shaping the short- and long-term future of the sector worldwide.
Learn more about driver-assisting AI technology in this blog: The Increasing Role of Virtual Assistants and Chatbots in Revolutionizing Automotive Industry.
How does AI blend into the Automotive Industry?
First of all, it’s important to distinguish the different automotive applications of AI into two different areas: the vehicles themselves, and the processes of the businesses involved with making and selling those vehicles.
AI in automobiles and accessories
AI is being applied in a range of different ways within vehicles, and collectively they are making the act of driving easier, safer and more efficient, as well as improving safety for those in the vicinity of the vehicle, too.
Innovations include sensors that enable safe autonomous vehicle movement whatever the environment, driver assistance tools like lane assist or dynamic cruise control, and energy management and optimization technology that maximizes range and efficiency for EVs.
AI in automotive businesses
Away from the roads, AI is also supporting automotive businesses in many of their day-to-day tasks. This starts on the factory floor, where it supports faster and more predictive supply chain optimization, maintenance and quality control.
The use of AI-powered IT products then spreads to the dealership - before, during and after the sales process. Dealer staff are empowered to create professional, informative replies to messages more quickly, helping improve AI-powered customer service and satisfaction. They can also use AI to collect and collate customer feedback and social media sentiment and use those insights to develop automated and/or personalized marketing campaigns.
Challenges in Incorporating AI in the Automotive Industry
All of the automotive businesses that have successfully progressed with AI have cleared a number of challenging hurdles along the way - and continue to do so as new innovations and opportunities come on stream. At present, four challenges stand out in particular:
Security
Cybercrime continues to threaten every digitally-enabled part of life, and with AI and technology being used in vehicles more and more, the consequences of a successful breach could be severe for businesses and drivers alike.
Data Protection
The rise of AI and connected systems within vehicles raises a risk that personal data such as customer whereabouts may be collected without their consent, mislaid or misused. In January 2025, it was revealed that extensive location and contact details of 800,000 Volkswagen EV owners, collected through the vehicles, was available unprotected online.
Compliance
Data protection regulations are strengthening all the time, partly to keep drivers and their information safe, and partly to prevent incidents like the one above from happening again. For example, the European Union’s Data Act, which comes into force in September 2025, gives individuals more control around who is and isn’t allowed to use their data, and for what means.
Technical Integration
As AI systems get more and more complex, integrating with legacy systems and ensuring everything runs properly can become extremely difficult and expensive - not only initially, but also in ongoing maintenance and continuous improvement terms.
Notable Success Stories of AI in the Automotive Industry
It’s estimated that by 2030, as many as 10% of new car sales worldwide could be Level 3 autonomous, i.e. self-driving. Naturally, the safety of these AI-driven systems is a major concern, but two recent success stories underline the progress being made in that area:
- Volvo Collision Avoidance: these systems combine sound, sight and brake-pulse warnings - and automatic braking when necessary - so that drivers can take action to avoid collisions with pedestrians, cyclists or other vehicles.
- Tesla Autopilot: Tesla’s AI-powered automation technology recorded one crash per 4.85 million miles of driving in 2022, compared to one crash per 1.4 million miles when the technology wasn’t being used.
Tips for AI Success in the Automotive Industry
While the challenges listed above are difficult, none of them are insurmountable with the right approach and expertise in place. We recommend the following:
Ciklum is already working with automotive businesses just like yours, helping them embrace all the possibilities of artificial intelligence, balanced against safety, security, compliance and cost management. Take a moment to explore our approach to AI, then get in touch with the team to find out more.
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