Mobility Industry Outlook for 2025: Expectations and Concerns Amid U.S. Policy Shifts and China's Rapid Pursuit

The mobility industry is expected to undergo significant changes in 2025, driven by advancements in electrification, AI, and autonomous driving. Externally, the global trade landscape is being reshaped amid geopolitical tensions, leading to increased protectionism and localization strategies.

In the U.S., the Trump 2.0 era is likely to bring extensive economic sanctions on China, including revoking Most-Favored-Nation (MFN) status, imposing high tariffs, and blocking indirect trade routes. These policies will align with tax credit reductions on EVs and supply chain decoupling efforts, urging global companies to localize production. Tariffs, reshoring incentives, and trade deficit reduction policies will accelerate domestic investment in the U.S., reshaping the competitive landscape.

Electrification and the Battery Industry

With the battery industry maturing, the global expansion of EVs will continue, although declining battery prices and slowing demand will force automakers to restructure their electrification strategies.

  • Europe’s stricter environmental regulations will necessitate a shift toward BEVs (Battery Electric Vehicles) and PHEVs (Plug-in Hybrid Electric Vehicles).

  • The U.S. and Europe are tightening trade barriers to reduce dependence on Chinese batteries and raw materials.

  • In response, China is reinforcing domestic subsidies and increasing exports to solidify its market dominance.

  • Chinese OEMs are aggressively expanding their smart BEV offerings and global manufacturing hubs, sustaining growth despite geopolitical uncertainties.

AI and Software-Defined Vehicles (SDVs)

The rise of AI is accelerating the development of Software-Defined Vehicles (SDVs) and regulatory discussions.

  • Waymo is seeking new investments and partnerships with Hyundai and expanding into Tokyo.

  • However, high-cost structures are a growing concern, as seen in GM’s Cruise canceling new investments.

  • Tesla, Baidu, and Huawei are at the forefront of SDV innovation, with Chinese firms rapidly catching up.

  • Regulatory frameworks in both the U.S. and China are expected to ease restrictions on real-world testing to foster innovation.

Autonomous Driving Expansion

The race for autonomous driving is intensifying, with major OEMs leading technological advancements.

  • Mercedes-Benz is advancing MB.OS, integrating OTA (Over-the-Air) updates and collaborating with NVIDIA on next-gen vehicle architecture.

  • The EQS model features Level 3 autonomous driving, integrating electrification and autonomy.

  • BMW is focusing on SDV technologies, leveraging OTA updates for autonomous functions and smart services.

The investment race is expected to continue among big tech firms aiming for dominance in mobility technology.

  • Waymo has raised over $5 billion, maintaining its leadership in autonomous driving.

  • Baidu is investing $1.5 billion annually in autonomous driving R&D.

  • NIO and Xpeng have each secured over $1 billion in funding to bolster their technological competitiveness.

  • Hyundai Motor Group plans to invest $6 billion by 2025 in autonomous and electrification technologies, actively collaborating with startups to expand its technology ecosystem.

Opportunities and Challenges in 2025

Opportunities:

  • Regulatory easing in the U.S. is expected to lower market entry barriers, particularly in logistics and autonomous vehicle commercialization.

  • Demand for smart cities and eco-friendly mobility solutions is projected to rise.

Challenges:

  • Technological and regulatory hurdles remain a major bottleneck for full-scale deployment of autonomous vehicles.

  • Safety and liability issues continue to pose obstacles to commercialization.

  • High development costs hinder the pace of mass adoption.

  • Cybersecurity threats and data privacy concerns remain pressing issues.

Final Thoughts

The mobility industry in 2025 is poised for dynamic transformations driven by geopolitical shifts, technological advancements, and regulatory developments. Companies will need to strategically navigate supply chain shifts, regulatory landscapes, and evolving consumer expectations to stay competitive.

While autonomous technology and SDVs present exciting opportunities, challenges in cost structures, regulation, and cybersecurity will shape the industry's trajectory. The race for leadership in electrification, AI, and autonomous driving will define the next phase of global mobility innovation.

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About the Author: Drytree

About the Author: Drytree (Jaehoon Lee) I am a senior researcher specializing in deep tech startups, technology commercialization, and R&BD strategy at a national research institute in South Korea. With a deep curiosity about the rapid evolution of technology and its impact on society, I have been writing under the pen name Drytree since 2021, aiming to make complex technological trends more accessible and foster informed discussions on innovation and policy. My academic background is diverse, spanning Political Science (B.A.), International Politics (M.A.), and currently, a Ph.D. in Technology Management & Entrepreneurship . I have published 13 academic papers in domestic and international journals, covering topics such as patent analysis, technology security, and industrial policy . Books & Publications I have authored several books exploring technology, startups, and geopolitical implications of innovation , including: Elon Musk’s DOGE: The Dawn of a New Economic Exper...
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