Tesla And Chinese EV Startups Outpace Toyota, Volkswagen In Critical Software Race: Report

Toyota Motor Corp TM, Volkswagen AG VWAGY, and General Motors Co GM are lagging behind Tesla Inc TSLA and several Chinese competitors regarding critical software needed to power electric vehicles (EVs), the Financial Times reports.

Only three legacy automakers—Ford Motor Co F, General Motors, and Bayerische Motoren Werke AG BMWYY—made the top 10 in their “digital automaker index,” the Financial Times cites a Gartner report. Tesla, Chinese companies like Nio Inc NIO and Xpeng Inc XPEV, and startups such as Rivian Automotive, Inc RIVN and Lucid Group, Inc LCID dominated the list.

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The automotive industry transition to software development proved challenging for major players like Toyota and Volkswagen, who need help to keep pace with changes focused on software controlling EV batteries, safety systems, and self-driving technology.

However, Chinese EV stocks are also facing a challenging year, as the domestic economic slowdown led to a price war. The stocks are down 31%- 42% in the last 12 months.

The U.S. sanctions on advanced artificial intelligence chips further affected the industry. Tesla is up 0.80% in the last 12 months.

Meanwhile, another U.S. embargo on the auto industry posed an additional problem. The U.S. Commerce Department is considering restricting importing and selling Chinese-made vehicles that contain critical communications and automated driving systems, citing national security concerns.

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• Toyota Scales Back 2026 EV Production Plans By 30%, Trims Target To 1M Cars As Global Demand Weakens: Report

Disclaimer: This content was partially produced using AI tools and reviewed and published by Benzinga editors.

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