Auto industry in technological, regulatory turmoil… yet again

Market contractions mixed with regulatory changes are forcing automakers to rethink how and what they’ll be producing in the next 10 years.

Sound like today? Mark Barrott (second from right in image) of Plante Moran was talking about 2015 when he brought up the last major industry tech reshuffling at a panel discussion at the 2025 Automation Fair in Chicago.

“The biggest issue that the industry was facing was finding warehouses big enough to house all the cash that they’d be making from all those big initiatives,” said Barrott, partner for Plante Moran’s strategy practice and lead for its mobility consulting practice. Known as ACES or CASE, the future of autos in 2015 was Connected, Autonomous, Shared and Electric. Nearly everyone in the industry agreed that was the direction where things were heading—and they were all wrong together.

Connectivity remains popular in some vehicles but hasn’t become an industry norm. Autonomous vehicle research continues but has yet to become standard. Electric—a lot going on there, we’ll talk about it later. And shared? Barrott said, “COVID put a bit of a torpedo in shared for the moment.”

So, automakers pivoted and spent R&D and capital budgets elsewhere. As automakers today deal with the loss of electric vehicle tax credits in the United States (yet continued investment in the technology in China), tariffs and other trade barriers and a global market that’s becoming more expensive to serve, expect the companies to pivot once again and adapt.

Adaptability, flexibility, visibility become critical

With change being the constant, companies that can adapt quickly will dominate the future. Bill Sarver (rightmost in image), global director of Rockwell Automation’s Smart Manufacturing - Automotive/EV, Battery & Tire business, said that need for flexibility is changing the technology buys major automakers are making.

“‘How do I get to a lot size of one with mass production?’” Sarver said. “That’s global, it doesn’t matter if you’re an EV maker in China, where they’re stitching names of buyers into the seats…or if I want to build an SUV, a car or an EV, all one after another, on the same line.”

The digital thread—a continuous data connection between enterprise resource planning (ERP), manufacturing execution systems (MES), product lifecycle management (PLM) and various supply chain visibility and optimization systems—is the main technology supporting that adaptability, Sarver and other speakers said. It’s not a new concept, but manufacturers are adopting it and paying more attention as the need to serve different markets with increasingly complex products has grown.

“It's really a matter of making sure that the vehicle that is produced is of top quality and is going to hopefully not require recalls down the road,” said Craig Resnick (second from left in image), vice president of consulting at the ARC Advisory Group. With the digital thread, when automakers see complaints rise in their customer relationship management (CRM) software, they can tie that to repair data from their dealerships, design data in the CAD systems in the PLM software and make design changes quickly, before defects lead to recalls which add cost and hurt company reputations.

Resnick added that companies want “that ability to not only control a cost but really have a much better sense of predictability based on having a managed supply chain and being able to have that operational resilience.”

AI enters the picture

As with any conversation about modern technology, the panelists discussed artificial intelligence—a force that they all agree is transforming the auto industry, but not in ways that will be visible to most drivers.

While Tesla and others continue to test AI-driven autonomous vehicles, the broader industry has pulled back on investments there. However, most continue to invest in digital systems that collect data from various sources to optimize every phase of vehicle development and manufacturing.

Plante Moran’s Barrott said, “A lot of what we call transformation, it’s not what consumers are going to really see. It’s going to be in the construction, such as, how many components can we get out of this vehicle?” Consolidated parts to remove welds, rivets and fasteners will likely reduce labor costs and speed production, improving margins. “That’s transformation—cost transformation.”

For 2026, Plante Moran is forecasting a dip in auto sales, primarily caused by affordability concerns, noting that the average cost of a new car in the United States is just shy of $50,000, “and the average vehicle is just that, an average vehicle.”

Longer term, the industry needs to find ways to take out costs and grow sales. AI and the digital thread are likely ways to achieve that, even if they’re not the sci-fi robot cars or flying vehicles that some people expect.

The future of electric

Going back to Barrott’s discussion of how quickly markets change, the 2015 excitement in CASE vehicles soured quickly and transformed into a furor for EVs. Automakers and battery producers (with some prodding from federal incentives) bet big on an all-electric future. Those incentives, paired with big tax breaks for EV buyers, led to rapid growth in that industry, but not as rapid as automakers had projected.

When he won re-election, Donald Trump began clawing back many of those EV incentives and got rid of the last of them in the Big Beautiful Bill funding package this summer. EV tax credits expired at the end of September, and EV sales plummeted in October and appear poised for continued drops in November.

“Consumers are voting with their feet,” Barrott said, adding that consumers remain concerned about vehicle cost and the availability of chargers for their electric cars. Long-term, he said he worries that a lack of investment in EVs in North America could put the U.S. industry behind technologically if Chinese or European companies develop solutions to range and charging issues.