Tesla, long known for maintaining strong profitability in the electric vehicle industry, saw its performance slip for the first time in 2025. Fourth-quarter deliveries and adjusted profit are expected to decline year-on-year by 3.6% and as much as 40%, respectively. Clearly, Tesla’s EV business is facing mounting pressure from intensifying competition and ongoing brand controversies. Investors, meanwhile, are increasingly focused on whether CEO Elon Musk’s long-promised vision for autonomous driving and artificial intelligence is finally beginning to translate into tangible, verifiable commercial results. This expectation stands in stark contrast to the strain currently weighing on Tesla’s core EV operations.

A recent report from Nikkei states that Toyota plans to extend the average sales cycle of its flagship and mainstream models from the current seven years to nine years. This move indicates that one of the world’s largest automakers is recalibrating its product lifecycle strategy and shifting its focus toward electrification and software-defined vehicles. In the past, Toyota typically introduced a full model change roughly every five years. As hardware technology matured in the 2000s, this interval expanded to seven years, and now further to nine. This shift suggests that vehicle value is transitioning from hardware-based upgrades to improvements maintained and enhanced through software updates.

Gartner recently released its 2025 Digital Automaker Index, revealing that legacy automakers such as Renault, Jaguar Land Rover, and Ford continue to fall behind in software capabilities, struggling to catch up with “digital native” brands such as Tesla, Nio, and Xiaomi. Gartner refers to automakers with leading software strength as “new incumbents.” These companies improved their combined score across eight software-focused criteria from 60.6% in 2024 to 61.6% in 2025. In contrast, the score for traditional automakers fell to 33.8% this year, down from 34.1% last year.

As the global automotive industry faces the dual challenges of electrification and pricing pressure, two major automakers—General Motors (GM) from the U.S. and Hyundai from South Korea—have announced an expanded partnership. Together, they will co-develop five new vehicle models, covering both internal combustion engine (ICE) vehicles and electric vehicles (EVs). The collaboration will also extend to shared resources in the supply chain and manufacturing processes, aiming to directly compete with the rising wave of new Chinese automakers in global markets.

For over a century, automakers have handled product quality issues reactively—problems are discovered by consumers, reported by dealers, and then addressed through recalls or repairs by the manufacturers. This approach is not only time-consuming but also costly. Now, with the rise of Software-Defined Vehicles (SDVs) and the increasing availability of vehicle data, the automotive industry is ushering in a new era of quality management driven by artificial intelligence (AI).

Over the past two years, China has witnessed an intense price war in the electric vehicle (EV) market, driven by both emerging EV startups and traditional automakers. This phenomenon, often referred to as “involution,” may have boosted short-term sales but has also led to plummeting profit margins and bloated inventories across the industry. In response, China’s State Council has officially announced plans to rectify what it calls “irrational competition” within the EV sector, vowing to strengthen cost investigations and enhance price monitoring. Could this mark the end of involution and restore order to China’s automotive market?

This week, Ford Motor Co. announced the layoff of approximately 350 employees from its North American connected vehicle software team, accounting for about 5% of the department’s workforce. This decision highlights the challenges faced by automakers at a critical juncture in the transition to the Software-Defined Vehicle (SDV) era. Even though connected functions and digital experiences have become the core battlegrounds for product development and brand transformation, car manufacturers continue to face multiple hurdles, including talent integration, resource allocation, and adjustments to technical architecture.