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Automotive companies are accelerating AI adoption while battling headwinds from economic uncertainty driven by shifting U.S. trade policy.
The financial strain cannot be overstated, as General Motors projects up to $5 billion in tariff costs this year, Toyota Motor Corp. forecasts a net income decline of 21% amid levies and Ford Motor Co. expects tariffs to cost the company about $2.5 billion in gross profit this year.
In the face of economic uncertainty, major carmakers are turning to AI, automation and strengthened data analytics capabilities to unlock efficiencies, save costs and help buoy the business.
Ford COO Kumar Galhotra said the company is working with several partners on AI projects that will “save us substantial amounts of costs” during its Q1 2025 earnings call earlier this month.
The company is implementing AI within its product development system, which is already saving weeks worth of effort as part of the design process, Ford executives said. The carmaker is also experimenting with AI-powered robotics, such as its Boston Dynamics robot dog deployed in an assembly plant in Spain.
“It has sensors on it that can see, hear, feel vibrations, smell any leaks of oil,” Galhotra said. “It just literally walks around the plant all day long and has changed how we do our preventive maintenance because it can see and hear and look for errors well before a human being could.”
General Motors has relied on partners to beef up its AI capabilities, too. The company partnered with chipmaker Nvidia in March to accelerate the integration of AI-powered hardware and software in its vehicles. The partnership was announced just a few weeks after the automotive manufacturer appointed its first chief AI officer.
“We have many other partnerships going on because we think we can leverage AI to make our business much more efficient and faster,” GM CEO Mary Barra said during the company’s Q1 2025 earnings call earlier this month. “We just hired a new head of AI who’s working across each area of the business, and each of my directs has a goal to demonstrate how they’re leveraging AI to either improve the way we do business or the cost of how we do business.”
GM is using AI to bolster safety, improve quality and unlock efficiencies as well. The company implements digital twins to simulate a running production line to optimize planning processes and save time and money, according to a March blog post. Other use cases include pinpointing potential leaks in battery packs, inspecting welds and painting coats, and locating optimal locations to install electric vehicle chargers.
Toyota executives also highlighted the potential benefits of AI in its latest earnings call. The company plans to use the technology to improve vehicle development and build assistants that boost customer satisfaction.
“We intend to materialize the diverse values that data and AI will create, such as database vehicle development and service evolution, AI agents that grow together with customers and services that utilize onboard sensors,” President and CEO Koji Sato said during the company’s Q4 2025 earnings call earlier this month.
Last year, Toyota became an early adopter of agentic AI, deploying around nine AI agents to help store and share knowledge as part of a Microsoft partnership. Each agent has a different expertise and role, from helping engineers answer design efficiency questions to suggesting better ways to meet regulatory standards. The AI system is built on Microsoft Azure OpenAI Service and uses OpenAI’s GPT-4o model.
“The proprietary system is grounded with Toyota’s design data — that includes its past engineering design reports, the latest regulatory information and even handwritten documents by veteran engineers,” Microsoft said in a November blog post. “In the future, the system will select the right agents on its own, without users needing to do so.”
