The European automotive industry is undergoing a pivotal transformation in 2025, driven by tightening EU climate regulations, rising consumer expectations, and global supply chain pressures. According to the latest ISG Provider Lens® Automotive and Mobility Services and Solutions report, enterprises are ramping up adoption of AI, IoT, robotics, and digital platforms to meet these challenges head-on.
Published by Information Services Group (ISG)—a global AI-focused technology research and advisory firm—the report outlines how European automakers are embracing smart manufacturing, product innovation, and sustainable mobility strategies to stay competitive and compliant.
AI, IoT, and Robotics Power a Smarter Factory Floor
European automotive and mobility companies are increasingly integrating AI-driven predictive maintenance, real-time monitoring, and robotics across production lines. These technologies support cost efficiency and quality improvements while enabling the flexibility needed to support low-emission and electric vehicle (EV) production.
“Digitalization and sustainability practices are no longer optional—they’re business-critical,” said Andreas Fahr, Partner and Manufacturing Industry Lead at ISG EMEA. “Enterprises must now address evolving tech demands and customer expectations simultaneously.”
Navigating Sustainability with Digital Innovation
The report highlights several core initiatives:
- Localized Battery Production – Mitigates supply chain risks and reduces import dependence.
- EV Lifecycle Management – Focuses on battery recycling and second-life applications to ensure environmental compliance and resource efficiency.
- Data-Driven Vehicle Services – Enhances digital offerings, such as real-time diagnostics, infotainment, and predictive servicing.
These advancements align with EU climate mandates such as the Fit for 55 legislative package and national efforts like France’s Crit’Air, which are pressuring automakers to reduce emissions and support a cleaner vehicle mix.
Connected Mobility and New Revenue Streams
As vehicle value shifts toward software and services, automakers are transforming their offerings:
- Software-defined vehicles (SDVs) and connected car platforms are now central to R&D.
- Mobility services such as car-sharing, subscriptions, and ride-hailing are gaining traction, especially in urban environments where car ownership is declining.
- Companies are investing in digital identity and personalization tools, leveraging real-time data to tailor user experiences.
“We’re witnessing the emergence of the car as a digital product,” said Harish B, lead author of the report and principal analyst at ISG. “From onboard AI to cloud-based services, automakers are reengineering the vehicle ecosystem.”
Skills Development and Ecosystem Expansion
To keep pace with digital and environmental demands, the report also points to growing investments in upskilling the workforce and expanding AI R&D partnerships. The industry is actively recruiting AI, cloud, and data science talent while also training traditional engineers in software-centric practices.
Market Leadership and Provider Landscape
The ISG Provider Lens® report evaluated 41 providers across five key quadrants, naming top performers in areas ranging from engineering and EVs to consulting and aftermarket services.
Leaders in all five quadrants:
- Accenture
- Capgemini
- Cognizant
- HCLTech
- IBM
- Infosys
- TCS
- Wipro
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