The global automotive market reached a critical turning point in 2025 amid unprecedented pressures from tariffs, policies, and inflation, triggering preemptive buying before expected downturns. In China, domestic sales are estimated to have hit 27 million units in 2025, nearing the historic peak of 2017.

China's expanded vehicle trade-in program is set to reinforce its rise as the world's largest auto market, supporting domestic demand while intensifying export pressure overseas. As sales overtake Japan's for the first time, the policy highlights how Beijing is linking consumption stimulus with industrial and geopolitical ambitions.

2025 proved turbulent for downstream applications and end-user devices. Tariffs and geopolitical tensions dominated the first half, while AI gained momentum later in the year. Global market unpredictability pushed many brands—particularly in China, the epicenter of geopolitical tensions—toward domestic markets and self-sufficiency.

The Ministry of Transportation and Communications (MOTC) released the Taiwan New Car Assessment Program (TNCAP) results for the fourth quarter of 2025 on December 29, 2025, highlighting the Luxgen N7 as the sole model to achieve a 5-star safety rating. The announcement follows comprehensive testing of four selected vehicles, an initiative aimed at enhancing consumer transparency and raising overall vehicle safety standards across Taiwan.

Ability Opto-Electronics Technology (AOET) expressed optimism for its 2026 operations during its earnings call on December 30, despite the notebook market being impacted by rising memory prices in the fourth quarter of 2025, prompting some customers to scale back shipment volumes. Chairman Victor Kao pointed to the company's new product line expansions and the gradual securing of customer certifications as key drivers of confidence for 2026.

In 2025, the global automotive industry faced major structural shifts and geopolitical disruptions. Slowing growth in battery electric vehicles, changes in US EV policies, and chip supply chain issues forced automakers and suppliers to speed up strategic changes. DIGITIMES News highlights the top 10 key trends shaping the industry this year, providing valuable insights for stakeholders.

Fukuta is accelerating its push into the emerging unmanned vehicle market by developing compact electric motor and joint motor modules, aiming to capitalize on new structural opportunities in the electric motor supply chain driven by drones, low-earth orbit satellites, and robotics moving from demonstration to commercial use.

LG Energy Solution has ended its battery supply agreement with US module maker FBPS (Freudenberg Battery Power System), following a separate contract termination with Ford Motor Company, marking the combined termination of deals worth approximately KRW13.5 trillion (US$9.38 billion). The move reflects ongoing instability in the electric vehicle (EV) battery sector amid subdued vehicle demand.

Samsung Electronics has begun supplying its advanced Exynos Auto V720 processor to BMW's iX3 electric vehicle, signaling the company's formal entry into the automotive semiconductor market, according to Hankyung and Yonhap News Agency. The chip, manufactured using a 5nm process, powers the in-vehicle infotainment (IVI) system of BMW's new generation EV series, Neue Klasse.

At the close of 2025, the European Commission dropped a bombshell on the continent's auto industry with its new Automotive Package, introducing unprecedented uncertainty for manufacturers and fleet operators alike.

The global automotive industry experienced moderate growth in 2025, driven by electrification and smart technologies. But rising geopolitical risks, cost pressures, and uneven regional demand are deepening market segmentation. As automakers recalibrate strategies, component suppliers—particularly in Taiwan—are positioning for a cautious and highly selective recovery heading into 2026.