Mar 6 2025
The automotive industry experienced a shift last year towards more strategic growth as it navigated the evolving landscape of electric vehicles (EVs), autonomous vehicles (AVs), and new partnerships. While EV adoption continued to grow, the pace was slower than anticipated. Autonomous vehicle technology has continued to progress, and Bill Gates has stated that we will reach the tipping point with semi-autonomous vs fully autonomous vehicles within the next decade. Industry partnerships also became increasingly important as automakers sought to share resources, reduce costs, and accelerate innovation in an increasingly competitive environment.
This blog explores how these three interconnected trends - EV production adjustments, the development of autonomous vehicles, and the growing role of strategic partnerships - highlight the importance of a measured, adaptable approach to navigating an ever-changing market.
According to 2024 automotive market data, EV sales stalled at 8.1% of the market, with consumer hesitation around affordability and charging infrastructure slowing mass adoption. Many automotive companies overestimated BEV (battery electric vehicle) demand partly due to an assumption that government regulation would accelerate consumer interest. However, incentives and emission targets did not translate into immediate consumer adoption, leading to excess inventory and scaled-back production.
There were several pathways that automakers could take to meet these regulation goals, one being to increase EV production. However, the EPA’s emissions rule notes that targets can be met through increased hybrid vehicle production and mitigating emissions from ICE vehicles. This production approach paid dividends for Toyota. Initially criticized for its slower transition to EVs and its focus on hybrid and ICE vehicles, Toyota showed the value of prioritizing sustainable growth over aggressive investment. Hybrids accounted for more than one-third of Toyota’s U.S. sales in 2024, reflecting strong consumer interest in lower-cost, fuel-efficient alternatives. While others had to scale back or abandon EV projects altogether, this steady approach helped Toyota avoid costly overproduction and emerge as a leader with a more diversified strategy. By focusing on hybrids, Toyota is able to align with both customer preferences and evolving regulatory frameworks.
The past year highlighted the promise of autonomous vehicle technology. Waymo, one of the leaders in this space, continued to advance AV technology with a focus on vehicle safety, community acceptance, and real-world testing. Their new 6th-generation driver features 13 cameras, lidar, radar, and external audio receivers to improve vehicle driving performance. Through strategic partnerships with municipal governments and OEMs, Waymo has accelerated regulatory approvals, expanding pilot programs for autonomous ride-hailing and delivery services in select United States cities. More cities are likely to follow suit and expand existing pilot programs, including shuttles, ride-hailing services, and delivery vehicles. If these pilot programs demonstrate safety and efficiency at scale, broader commercial adoption could follow.
Meanwhile, commercialization of AVs in the HD trucking industry also advanced in 2024, showing potential to overcome industry challenges such as high operational costs, driver shortages, and safety concerns. Startups are building and fitting technology on the truck chassis provided by OEMs. This OEM involvement can help startups leverage OEM technical support while also reducing the pressure associated with mass production. Despite all of the progress made in 2024, full level 5 autonomy is still years away.
Leveraging partnerships to accelerate innovation was another defining theme of 2024. Industry collaborations can highlight the importance of strategic alignment and adaptability. A notable partnership was announced between GM and Hyundai, who have signed a Memorandum of Understanding to explore the collaboration of vehicle development, including gasoline, electric, and possibly hydrogen power. The partnership aims to reduce costs, speed up production, and improve competitiveness against foreign markets by sharing resources like steel and battery materials.
Other automakers have also begun forming alliances. Honda, Nissan, and Mitsubishi are exploring joint efforts in environmental technology, electrification, and software development. Meanwhile, Toyota, Mazda, and Subaru reaffirmed their commitment to combustion engines, investing in technologies such as carbon-neutral fuels and advanced hybrid systems. These examples show that partnerships thrive when grounded in mutual trust, clearly defined goals, and shared long-term vision. Companies that continuously refine their partnerships may be better positioned to harness innovation and stay ahead in a competitive market.
The future of the automotive industry is not being shaped by one company or one piece of technology alone, but through industry-wide effort. 2024 showed the value in adaptability as companies adjusted to consumer preferences, regulatory requirements, and technology advancements. OEMs can position themselves and help guide the direction of vehicle innovation, infrastructure, and regulation alignment. As partnerships continue to drive innovation, the ability to collaborate effectively will define the next phase of progress in the automotive industry.
