DIGITIMES Intelligence said its observations from the 2026 World Artificial Intelligence Conference (WAIC) show that AI is rapidly reshaping the automotive industry, with smart-car competition shifting from software-defined vehicles (SDV) toward AI-defined vehicles (AIDVs), as the sector moves beyond software upgrades into a new stage driven by AI.

Xiaomi has entered China's range-extended electric vehicle market with two large intelligent SUVs, expanding beyond battery-only models as it confronts slowing deliveries, renewed losses and intensifying competition from technology groups including Huawei and ByteDance.

Automotive chip sales are improving across Europe and the US, but major suppliers say global carmakers and their suppliers are still buying largely for immediate needs. A fuller inventory rebuild — one that could affect prices and supply globally — has yet to begin, leaving the recovery more cautious than expected.

Taiwan and the US are deepening auto trade ties that could influence consumer choice, supply-chain resilience, and tariff policy beyond the island's borders. The latest comments from the American Institute in Taiwan come as Taiwan weighs lower car import duties, a move that could affect prices, jobs, tax revenue, and trade dynamics worldwide.

Taiwan will not move ahead for now with proposed passenger car tariff cuts, as the government weighs the risk of disrupting the domestic vehicle supply chain and related jobs. Finance Minister Chuang Tsui-yun said the policy cannot currently be implemented because the Taiwan-US agreement tied to US-made cars has been rendered invalid.

Global automakers are facing slower market growth, the rapid rise of Chinese carmakers, and sustained EV investment, with Volkswagen, BMW, and Mercedes-Benz under strain in recent years. While German automakers still lead the global auto industry, revenue and profitability have come under broad pressure over the past two years as competition shifts from volume growth to product value and operating efficiency.