After a year of uncertain trade tariffs and geopolitical tensions, you might be thinking that 2026 has to be a little bit easier for automakers. Maybe not a cakewalk, but at least predictable, right?
Well, maybe not. In fact, the Hyundai Motor Group’s top boss warns that 2026 could be one of the toughest years that the industry has faced in a long time. And that’s saying a lot, considering how much of a rollercoaster 2025 was for industry veterans and newcomers alike.
Welcome back to Critical Materials, your daily roundup for all things electric and tech in the automotive space. Also on deck: EVs take a back seat and Xiaomi’s half-million car bet. Let’s jump in.
25%: Hyundai’s Crystal Ball Predicts Hardships For 2026
2025 Hyundai Ioniq 5 XRT
Photo by: Patrick George
Euisun Chung, the Executive Chairman at the Hyundai Motor Group, has sounded the alarm on what a difficult year 2026 could become for the car-making game. Not just for Hyundai—although the South Korean automaker is likely at the top of his list of concerns—but for the entire global auto industry.
Things have shifted. Free trade across to one of the brand’s largest markets has become less about being free and more about being how well a country can negotiate tariffs for its various industries. This amounts to billions of dollars per year, even for the countries that play ball. And Hyundai, which even went as far as to build plants in the U.S. to avoid import duties, continues to pay the price.
Automotive News reports:
In his New Year remarks, Chung warned that global trade tensions and intensifying competition would curb industry profitability, while geopolitical conflicts may impact operations in some regions, potentially leading to a suspension of business.
“This will be the year when the crisis factors we have long worried about become reality,” Chung said.
The largest South Korean automaker has been hard hit by U.S. President Donald Trump’s tariff regime, which has imposed a 15 percent levy on Korean-made cars. That cost Hyundai about 1.8 trillion won ($1.2 billion) in the third quarter alone.
Hyundai also faces tariffs on vehicles built in the U.S. and shipped to Canada, where the federal government has implemented reciprocal duties on Trump’s levies.
Adding to the challenges, an immigration raid on a Hyundai-LG Energy Solution plant in the U.S. in September is expected to delay construction by at least two to three months.
Cars are obviously the biggest concern that Hyundai has. But as the industry shifts away from EVs and more towards AI (more on this below), Hyundai knows that it needs to innovate or risk being left behind the competition.
Hyundai believes the answer is robots. The “physical AI” era, as some call it. Thankfully, Hyundai has robotics giant Boston Dynamics in its portfolio. The brand will use that skillset to build a giant robot army 30,000 units strong, which will build its cars, deliver your packages and do generally mundane robo-tasks that even the biggest Silicon Valley giants are unable to match.
“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,” said Chung. “This is a powerful weapon unique to us that Big Tech companies can’t easily imitate.”
50%: EVs Take A Backseat To Self-Driving and AI At CES 2026
Photo by: Hyundai
It wasn’t long ago when CES felt like a big car show. EVs out the wazoo (that’s the technical term), despite the show being a trade event meant to showcase the latest in consumer tech like TVs and video games.
This year’s show is not that. Experts and attendees say that the feel is very much a pivot from a crash course in battery-electric cars to a full-on autonomous driving and AI expo. Those are the real money printers, after all—or, at least, that’s the flavor of the week.
Here’s what Reuters knows:
CES, in recent years, has emerged as a key destination for automakers debuting their EVs.
But a pullback on EV-friendly incentives and policies by the Trump administration have dampened demand and forced many automakers to abandon plans to launch new EVs and rethink their strategy.The upheaval will be evident at CES. Most major automakers have no plans to launch any new EVs this year—a stark difference from the past few years.
As mentioned above, political influences certainly played a part in EV backpeddling. The next best thing (which is technically a driving factor for EVs, according to Rivian CEO RJ Scaringe) is autonomous driving.
That’s where the money is pouring into. Yes, despite the graveyard littered with the tombstones of companies like Cruise, Argo and the like. Recent momentum by players like Tesla and Waymo have revitalized the self-driving industry, and “eyes-off” has become the next big thing.
CJ Finn, automotive industry leader for Pricewaterhouse Coopers, explained to Reuters his take on why AVs are becoming a laser-focused industry from companies across various markets:
Commercializing autonomous vehicles has been not been easy. High investments, regulatory challenges and investigations after collisions have forced many companies to shut down. But Tesla’s launch of a small robotaxi service with safety monitors in Austin, Texas, last year as well as quicker expansion by Alphabet’s Waymo has breathed new life into the industry.
Driver-assist systems for personal vehicles have also improved, with some automakers offering hands-free driving and automatic lane change on highways. Some, such as Rivian, aim to launch “eyes-off” functionality and self-driving on city streets.
“That’s starting to align with where people are putting forward their money and how they’re allocating capital,” Finn said.
It’s hard to ignore that cost anxiety still hangs over everything. Automakers are still digesting billions in EV-related write-downs and absorbing tariffs while rapidly pivoting back to something it left in the dust years ago. Now there’s rising competition in autonomy, especially in China.
That means in order to stay relevant (and to fight off new car companies coming out of the east), Western automakers need to claw back their share of buyers in global markets. This begs the question: Is autonomy an exciting new moneymaker, or is it just a move to placate Wall Street?
75%: Xiaomi, Riding High On 2025, Targets A Half-Million Cars In 2026
Photo by: Patrick George
Xiaomi hit the EV industry like a tsunami. Coined China’s Apple Car, the SU7 sedan became an instant hit in Xiaomi’s home market and the YU7 crossover quickly followed. In 2025—its first full year—the brand sold a whopping 410,000 cars. And for 2026, Xiaomi set its sights even higher to target more than 550,000 units. Here’s more from Bloomberg:
Billionaire founder Lei Jun announced the target, which is up 34% from last year’s sales of 410,000 vehicles, during a livestream on Saturday.
Xiaomi also plans to expand its portfolio beyond the SU7 sedan and YU7 sport utility vehicle, and may launch four new models and refreshes in 2026, including a five-seater and a seven-seater extended-range EV SUV, Chinese outlet 34Kr reported on Dec. 30. Extended-range EVs contain a small gasoline engine that kicks in to recharge the battery when it runs out of juice, offering a long range.
Xiaomi’s car efforts managed to get attention from some pretty big figures. Ford CEO Jim Farley didn’t want to stop driving it, and Karl-Thomas Neumann, the former CEO of Volkswagen China, said that the SU7 ultra was a “loud warning sign” to Western automakers. So it should come as no surprise that the automaker is looking to expand its lineup to Europe in the future. Recent reports indicate that the brand is also expected to expand its lineup beyond the SU7 and YU7.
The company’s auto unit has also become profitable in record time. Xiaomi managed to hit profitability in 18 months, which is around half the time that it took Tesla to achieve the same feat. And it did so in a market saturated with EV brands that are all struggling to make ends meet.
A 34% increase in sales is a huge leap year-over-year for overall sales. But as Xiaomi has already proven, anything is possible in the EV world.
100%: Do You Really Want Self-Driving?
Photo by: BYD
I keep hearing the term “personal autonomy.” It seems like one of the biggest up-and-coming buzzwords in the auto industry, especially as brands look to find the next big thing that isn’t about batteries. That being said, brands seem to think that everyone buying a new car wants the car to be their personal chauffeur (hence the race to the self-driving future). How about you? Is this a factor that would make you choose one car over another option?
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– The InsideEVs team