The Top 10 Automotive Industry Trends to Watch (2025–2027)

The global automotive industry is undergoing a dramatic transformation. After a decade of relative stability, technological advances, environmental pressure, and changing consumer behaviors are disrupting every corner of the market, as highlighted by Josh Howarth, Exploding Topics. Between 2025 and 2027, these ten trends will play a defining role in the future of mobility.

1. Electric Vehicle Adoption Surges

Electric vehicles (EVs) have moved from niche to mainstream faster than many anticipated. Searches for “electric vehicles” have risen by 110% over the past five years, and global sales skyrocketed from 3 million in 2020 to an estimated 17 million in 2024.

China and Europe are at the forefront, with Europe overtaking China as the largest plug-in EV market. EV sales in Europe grew by 137% in 2020, even while the overall auto market shrank.

BloombergNEF forecasts that EVs will make up 10% of all new car sales by 2025 and an astonishing 58% by 2040. However, EVs are still projected to represent just 8% of cars on the road by 2030, indicating the full shift will unfold in the 2030s.

Crucially, falling battery costs and regulatory mandates are accelerating adoption. Lithium-ion battery prices have dropped 89% in a decade, and many countries aim to ban new internal combustion engine vehicles by 2050 in pursuit of net-zero emissions. «To meet many net-zero goals, EVs will have to climb to at least half of all new car sales by 2050,» notes the report.

2. Autonomous Vehicles Gain Momentum

Autonomous vehicles (AVs) are on the rise, although mass adoption remains years away. Interest in “autonomous driving” has soared over 1,000% in a decade, and the number of AVs on U.S. roads is projected to grow from 17,000 today to 33 million by 2040.

Tech giants and automakers alike are racing into this space. Alphabet’s Waymo operates in Phoenix, San Francisco, and LA, while Ford and Volkswagen jointly back Argo AI. Tesla continues pushing forward with its Full Self-Driving (FSD) system.

Still, the industry faces regulatory hurdles and consumer skepticism. Many are more comfortable with autonomous trucking than robotaxis. «Two-thirds of people say they would rather drive than ride in an autonomous car,» the article notes, highlighting the cautious mindset.

Companies like TuSimple, already operating 50 Level 4 autonomous trucks, plan to sell them commercially starting in 2024.

3. The Rise of the Connected Car

The integration of 5G and IoT is transforming cars into connected ecosystems. As of 2020, 47.5 million connected vehicles were sold, with the market projected to reach $191.8 billion by 2028.

Tech partnerships are reshaping car interiors. Google and Ford’s Team Upshift equips vehicles with Android OS and integrates AI to enhance in-vehicle experiences. Apple is also reportedly investing $3.6 billion into Kia to co-develop an autonomous electric car.

4. Online Car Buying Becomes Mainstream

The car buying journey has shifted online. Over 90% of buyers now research vehicles online, and more are completing purchases digitally.

Before the pandemic, just 4.2% of car sales occurred online. But in 2020, online-first sellers like Carvana saw massive growth, delivering 244,111 vehicles—a 37% YoY increase. By 2022, they sold over 412,000 cars.

Tesla embraced this trend early, closing physical showrooms in 2019 to focus on online sales. In 2024, Tesla held a 48.2% share of the EV market and drew 374 million site visits from nearly 169 million unique users. «Even before COVID-19, 43% of shoppers said they wished they could complete the entire car buying process online.»

5. Auto Parts Market Continues to Expand

The global auto parts market reached $723 billion in sales in 2021 and continues to grow, fueled by ecommerce and the increasing average age of vehicles.

Online aftermarket parts sales are estimated at $85.3 billion, with 94% of consumers researching parts online before purchasing. Light trucks and SUVs, which dominate new vehicle sales, drive much of this demand due to their customization and maintenance needs.

6. Chip Shortages Still Disrupt Production

Semiconductor shortages continue to impact global car production, delaying shipments and driving up costs. Despite industry efforts to diversify supply chains, the issue remains a significant bottleneck.

7. Low Inventory and High Prices Hit Auto Sales

New car inventories remain tight, pushing buyers toward used vehicles and inflating prices across the board. Consumers are holding onto vehicles longer, which supports the parts market but suppresses new sales volumes.

8. Micromobility Gains Ground

E-scooters, bikes, and compact EVs are gaining popularity in urban areas. As consumers seek flexible, low-emission alternatives for short trips, micromobility may reshape last-mile transportation and reduce reliance on personal vehicles.

9. Hydrogen Emerges as a Future Fuel Source

Hydrogen-powered vehicles remain a niche, but interest is growing. Advocates see hydrogen as a complement to EVs, especially for long-haul transport and industrial use. Further investment and infrastructure will determine its role in the energy mix.

10. Luxury Brands Thrive Despite Volatility

Luxury automakers are outperforming expectations. As wealth concentration and demand for high-end tech features increase, brands like Mercedes-Benz, BMW, and Tesla’s premium models are seeing strong sales even amid market uncertainty.

From EVs to online sales and connected technologies, the automotive industry is entering a phase of rapid reinvention. With shifting regulations, changing consumer preferences, and a wave of innovation, automakers and suppliers must adapt—or risk being left behind.