VWAGY's Big AI Bet: Automakers Race to Harness Artificial Intelligence

The automotive world is changing fast, with artificial intelligence (AI) becoming an integral part of it. German auto giant Volkswagen VWAGY made headlines by pledging up to €1 billion ($1.18 billion) by 2030 to bring AI into vehicle development, factories, IT, and cybersecurity. The company hopes that smarter processes will not only speed up building new cars but also save up to €4 billion by 2035.

AI Across the Entire Value Chain

This push comes at a critical moment. Volkswagen is facing rising competition in China and pressure to cut costs in Europe, signaling that traditional manufacturing alone may no longer be enough to maintain its edge. By investing in AI, the company aims to accelerate innovation cycles and enhance efficiency. For Volkswagen, AI is expected to transform every layer of the business—from design and simulation to cybersecurity to how fast it can test and validate new vehicles.

VWAGY currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AI is already reshaping the way people interact with vehicles, from in-car voice assistants to predictive maintenance and over-the-air updates. Automakers are quickly moving to make these technologies part of everyday driving. While every automaker may not be disclosing the AI investments they are making, their strategic alliances with top AI firms signal equally deep commitments.

GM, BMW and STLA’s AI Collaborations

U.S. legacy automaker General Motors GM is deepening its AI capabilities through a partnership with NVIDIA NVDA. GM has been using NVIDIA GPUs to simulate and validate advanced driving systems. The two companies are collaborating on a wide range of projects, from AI model training to in-vehicle hardware. General Motors is using the NVIDIA Omniverse platform to build digital twins of assembly lines.

These virtual environments allow General Motors to test and refine manufacturing processes before implementing them in the real world, reducing downtime and costs. In addition, General Motors will deploy NVIDIA DRIVE AGX in future vehicles for advanced driver-assistance systems and enhanced in-cabin safety features. NVIDIA is quickly establishing itself as the leading AI hardware and software partner for automakers.

Italian American automaker Stellantis STLA is leaning on partnerships with AI specialists to improve both customer-facing and back-end operations. Its collaboration with Mistral AI covers vehicle engineering, manufacturing optimization and fleet data analysis. The partnership leverages Mistral’s expertise in large language models to accelerate development timelines and boost quality. Stellantis is also working with Mistral AI to build AI-driven assistants that act like conversational manuals for drivers.

Volkswagen’s close peer, BMW, has teamed up with Alibaba to make its Intelligent Personal Assistant (IPA) smarter. They are building a new AI engine together, based on Alibaba’s Yan AI from Banma’s smart cockpit system. This upgraded AI assistant will appear in BMW Neue Klasse cars made in China from 2026, aiming to make the driving experience more intuitive and interactive.

TSLA’s Unique Approach

Unlike these legacy automakers, Tesla TSLA is positioning itself as more than just a car company. It is pivoting its core focus to AI, autonomous vehicles, and robotics. Tesla’s efforts include Full Self-Driving neural networks, autonomous driving systems, and the Optimus robot project. This approach gives Tesla a head start in innovation and sets it apart from traditional automakers.

The Road Ahead

AI is no longer a side project for automakers—it’s essential for staying competitive. Companies that integrate AI effectively—whether through in-house innovation like Tesla, big investments like Volkswagen, or smart partnerships like General Motors, BMW and Stellantis—will gain a lasting advantage in speed, efficiency, and customer experience. For automakers, keeping pace with AI isn’t optional anymore—it will decide who leads the future of mobility.

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