Hyundai Motor Co. is predicting a tough road ahead for the auto industry in 2026 as the company works to navigate industry headwinds and improve its AI capabilities.
The details: The company's Executive Chair, Euisun Chung, issued the warning during his New Year remarks, saying that Hyundai's operations could face several challenges this year.
What they’re saying: "This will be the year when the crisis factors we have long worried about become reality," Chung said, pointing to global trade tensions, intensifying competition, and geopolitical conflicts that could force the company to suspend some business operations in certain regions.
For context: The largest South Korean carmaker has already been hit hard by President Trump's 15% tariff on Korean-made cars, which cost Hyundai roughly 1.8 trillion won (~$1.2 billion) in Q3 2025 alone.
And an immigration raid on a Hyundai-LG Energy Solution plant in the U.S. last September is delaying construction.
Why it matters: Chung is signaling that survival now depends on turning cars, robots, factories, and the data they generate into a tightly integrated “physical AI” ecosystem, not just selling more EVs or apps.
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Between the lines: Beyond the immediate headwinds, Chung also said Hyundai lags its competitors in the artificial intelligence race, calling for bold collaboration with partners to close the gap.
"If we look coldly at reality, leading global companies have already secured a dominant position in this field through investments worth hundreds of trillions of won, but the capabilities we have right now are not yet sufficient," said Chung.
Despite acknowledging the AI gap, Hyundai has already laid groundwork through its 2019 Robotics Lab launch and its 2021 acquisition of Boston Dynamics.
Now it's betting big on catching up:
The company plans to invest 125 trillion won ($86 billion US) in South Korea over the next five years in AI, robotics and other new technologies.
Motional, Hyundai's autonomous driving joint venture with parts-maker Aptiv PLC, plans to commercialize fully driverless Ioniq 5 robotaxis in Las Vegas by the end of this year.
At this year's CES show (Jan. 6–9 in Las Vegas), Hyundai will present its AI robotics strategy under the theme "Partnering Human Progress: AI Robotics, Beyond Lab-scale to Everyday Life."
Chung also laid out five strategic priorities for 2026: customer-focused evolution, agile decision-making, ecosystem competitiveness, bold collaboration, and leading new industry standards.
Bottom line: “The strength of our supply ecosystem directly amplifies our competitive advantage. Sustainable growth is possible only when the whole ecosystem stays healthy,” he said.
"As the focus shifts toward physical AI, the value of our moving entities, such as automobiles and robots, and our manufacturing process data will become increasingly rare. This is a powerful weapon unique to us that Big Tech companies can't easily imitate."
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