BOSTON —October 7, 2025—Digital technologies and artificial intelligence (AI) are poised to transform the economics of the automotive industry, according to new analysis from Bain & Company. In a report, Technology Is Radically Reshaping Auto Economics, Bain surveyed 300 auto industry managers across North America and Europe and found that the majority expect new technologies to usher in additional efficiency gains of more than 10% in three years and 30% by 2030.

This points to a pivotal opportunity for US automakers and suppliers, who are already moving to capture faster development cycles, lower costs, and stronger competitiveness.

“Automakers and suppliers have a unique opportunity to move ahead by embedding digital collaboration, automation, and AI across their operations,” said Bjorn Noack, Bain partner from the Automotive practice. “Our survey shows that leaders are especially confident in achieving near-term cost savings and faster time-to-market. By acting decisively now, they can set a new standard for competitiveness in the global industry.”

One of the most significant breakthroughs is a faster, smarter development process. Digital collaboration between original equipment manufacturers (OEMs) and suppliers has already begun to slash vehicle development times by more than 40%, with leaders now aiming for just 24 months to market. Teams working in sync across shared digital platforms are experimenting more freely and making decisions earlier in the process, reducing complexity, lowering costs, and allowing companies to respond more fluidly to shifts in demand and regulation.

AI is central to this change. 80% of auto industry managers believe AI will generate and optimize vehicle concepts within the next decade. More than 80% also expect AI simulations to dynamically reconfigure production plans in real time, while more than two-thirds envision production powered by humanoid robots, enabling 24/7 operations with minimal human intervention.

Additionally, more than 80% said they expect a shift to fabless production – similar to Apple’s iPhone arrangement with Foxconn – by 2035. Under this model, OEMs would design their products, focusing on customer experience and brand management, while delegating operations to external partners, who would take on the capital-heavy manufacturing.

However, the biggest obstacle to realizing substantial savings from adopting and scaling advanced technologies is the mindset. The study finds that US executives are acting decisively, and many are focusing on tangible near-term savings.

Companies also cite poor data quality as another key stumbling block. Many have invested in cloud infrastructure and edge computing, but systems remain fragmented, definitions inconsistent, and platforms built for an earlier era. These barriers leave large productivity gains untapped.

Bain’s analysis highlights four guidelines for success:

• Solve real operational problems rather than chasing tools
• Focus on high impact use cases that can be scaled
• Build a clean data backbone to enable digital tools
• Transform the operating model and incentives to embed change

The auto industry has faced cost pressure for decades, and AI and digital technologies are transforming the industry beyond marginal gains. This is a quantum leap in efficiency.

“The winners won’t necessarily be those with the most advanced tools or the largest budgets,” added Noack. “They will be the organizations that embed new technologies at scale, solve real problems, and move faster than the competition.”

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Media contacts:

Dan Pinkney (Boston) — dan.pinkney@bain.com 

Gary Duncan (London) — gary.duncan@bain.com

Ann Lee (Singapore) — ann.lee@bain.com

Rachel Ng (Kuala Lumpur) – rachel.ng@bain.com

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