Automotive Engineering and R&D Pulse Report 2026: What's Keeping Automotive Leaders Up at Night? (Capgemini Research Institute)

Summary

• The report is based on a survey of 200 automotive leaders at large organizations.p.2
• 89% of respondents say costs have increased in the last three years.p.4
• 67% of respondents say they need to decrease costs by 15-20% over the next 2-3 years to remain competitive.p.5
• While only 24% are actively restructuring engineering and R&D today, 59% plan to do so within the next 2-3 years.p.13
• 46% of respondents allocate 10-20% of their engineering and R&D budget to AI-related initiatives, and 87% expect that investment to rise.p.16
• 52% cite the reliability and accuracy of AI outputs as a major challenge to scaling generative and agentic AI beyond pilots.p.17

Key insights

1. New entrants from China and Tesla are described as producing quality EVs 20% cheaper and twice as fast.p.3
2. Product design and development time has decreased for 73% of respondents, and production ramp-up time for 68%.p.4
3. 57% believe they risk losing significant market share to startups and emerging market players within five years if they fail to make significant cost reductions.p.5
4. AI is cited by 56% as a disruptive technology.p.6
5. Improving agility ranks in the top two priorities for 63% of respondents, ahead of speed to market (59%).p.8
6. 93% have invested in or plan to invest in digital tools for scenario modelling and risk planning.p.11
7. 77% are investing in digital modernization such as cloud-native platforms, DevOps and digital twins.p.12
8. 71% expect AI to be transformative for maintenance and support over the next 2-3 years.p.15
9. 68% say AI allows increase in more than 50% in speed to concept due to rapid concept generation and faster iteration cycles.p.16