The automotive industry is ramping up its adoption of artificial intelligence (AI) despite facing significant economic challenges stemming from changes in U.S. trade policy. Major car manufacturers such as General Motors, Ford Motor Co., and Toyota Motor Corp. are projecting substantial financial strain due to tariffs. General Motors expects up to $5 billion in tariff costs this year, while Toyota forecasts a 21% decline in net income amid levies. Ford anticipates tariffs will cost the company about $2.5 billion in gross profit this year.
In response to these economic uncertainties, major automakers are turning to AI, automation, and enhanced data analytics to improve efficiencies, reduce costs, and support their businesses. Ford COO Kumar Galhotra revealed during the company’s Q1 2025 earnings call that the company is collaborating with several partners on AI projects expected to save “substantial amounts of costs.” Ford is integrating AI into its product development system, which has already streamlined the design process by saving weeks of effort. The company is also experimenting with AI-powered robotics, such as the Boston Dynamics robot dog deployed in a Spanish assembly plant. This robot is equipped with sensors that can see, hear, feel vibrations, and detect oil leaks, significantly enhancing preventive maintenance by identifying potential issues before human detection is possible.
General Motors has also bolstered its AI capabilities through strategic partnerships. In March, the company partnered with Nvidia to accelerate the integration of AI-powered hardware and software in its vehicles, just weeks after appointing its first chief AI officer. GM CEO Mary Barra emphasized the company’s commitment to leveraging AI to enhance business efficiency and speed. The company is using AI to improve safety, quality, and operational efficiencies. For instance, GM uses digital twins to simulate production lines, optimizing planning processes and reducing costs. Other AI applications include detecting potential leaks in battery packs, inspecting welds and paint coats, and identifying optimal locations for electric vehicle chargers.
Toyota is also exploring the benefits of AI, as highlighted during its latest earnings call. The company plans to utilize AI to enhance vehicle development and create customer satisfaction-boosting assistants. “We intend to materialize the diverse values that data and AI will create,” stated Toyota President and CEO Koji Sato during the company’s Q4 2025 earnings call. Last year, Toyota became an early adopter of agentic AI through a partnership with Microsoft, deploying around nine AI agents to facilitate knowledge storage and sharing. These agents, built on Microsoft Azure OpenAI Service and utilizing OpenAI’s GPT-4o model, possess different expertise and roles, ranging from aiding engineers in design efficiency questions to suggesting improved methods for meeting regulatory standards.