Software and AI Reshape the Automotive Industry, Cementing China’s Lead

The automotive industry is undergoing a rapid transformation driven by software and artificial intelligence (AI). This shift is not merely incremental; it’s a fundamental rewriting of the rules of the game, accelerating collaborative innovation and solidifying China’s position as a leader in intelligence, electrification, and ecosystem development.

The 7th Software-Defined Vehicle Forum Highlights Industry Trends

At the 7th Software-Defined Vehicle Forum, held on March 18, 2026, Gasgoo CEO Tina Zhou emphasized the pivotal role of software and AI in this evolution Gasgoo. The forum, co-organized by Gasgoo and AUTOSAR, also hosted AUTOSAR China Day on March 19, 2026 AUTOSAR. The event, guided by the Shanghai Jiading District People’s Government, served as a key side event for the Shanghai Global Investment Promotion Conference and the Shanghai Automotive Culture Festival.

From Vehicles to Broader Ecosystems

The industry’s focus is expanding beyond the vehicle itself, encompassing emerging fields like embodied intelligence and the low-altitude economy. Companies are increasingly viewing their core competencies as a foundational “software” layer, enabling expansion into industries requiring deep hardware integration. A recent event focused on embodied intelligence, held alongside the forum, attracted over 1,000 attendees from the robotics, AI, and automotive sectors, demonstrating the growing synergy between these fields.

China’s Automotive Industry: A Global Powerhouse

China’s automotive industry has become the largest in the world, with a total output value reaching approximately 13 trillion yuan. Globally, annual passenger car sales are around 90 million units, with China accounting for roughly 30 million, the U.S. For 16 million, and Europe for 13-14 million. With a domestic capacity exceeding 50 million units, China is aggressively expanding its vehicle and parts exports. Over the past three years, Chinese auto exports have surged, with models upgrading and market coverage widening. Chery, for example, now operates in 128 countries and regions.

Leading in Software-Driven Organizational Models

China is leading the transition towards a software-driven organizational model within the automotive supply chain, while other major markets remain largely focused on traditional internal combustion engine ecosystems. This positions China for significant global expansion in the coming three to five years. The forum attracted software firms from Europe, and chip and algorithm service providers from Southeast Asia and North America, all seeking partnerships within the Chinese market.

Intense Competition and Innovation

The Chinese automotive market is highly competitive, with approximately 78 automotive groups managing around 148 brands. In 2025 alone, over 200 modern models were launched. JAC Motors’ Yangjie S800, the first Chinese sedan priced above 1 million yuan, delivered 15,000 units within nine months of launch, outpacing the Maybach’s 2025 sales of approximately 11,000 units.

The Evolution to AI-Defined Cars

The industry has progressed from debating whether software could define the car to now focusing on “AI-defined cars.” Current discussions center on data and software security, personalized user experiences, toolchain localization, open-source software, and innovative business models. International suppliers, like Visteon, are significantly investing in their China teams, recognizing the region’s importance for future growth.

Looking Ahead

The Software-Defined Vehicle Forum aims to be a platform for identifying industry challenges, fostering collaboration, and creating new growth opportunities. Jiading is emerging as a hub for innovation, attracting firms in the low-altitude economy and embodied intelligence. China’s innovation model, characterized by rapid iteration and adaptation, provides a key competitive advantage.