Despite widespread excitement over artificial intelligence in the automotive industry, a new study suggests that only a small fraction of carmakers will sustain ambitious AI investments in the coming years. Analysts warn that much of the current enthusiasm may not translate into lasting competitive advantages.

According to a report released Monday by technology research firm Gartner, just 5% of automakers are expected to maintain strong AI investment growth by 2029—a steep decline from over 95% today. The findings paint a sobering picture for legacy manufacturers attempting to keep pace with tech-driven newcomers.

The study highlights that only companies with robust software foundations, technology-focused leadership, and a long-term commitment to AI are likely to pull ahead. This trend could deepen the competitive divide within the industry, giving an edge to firms like Tesla and BYD, which have embraced digital and software-first strategies from the outset.

Legacy manufacturers, including Volkswagen, face an uphill battle. Known historically for mechanical engineering excellence rather than software prowess, these companies are struggling to transform internal processes and corporate mindsets fast enough to match the capabilities of their tech-savvy rivals.

“Many traditional automakers are making efforts, but internal obstacles and outdated ways of thinking are holding them back,” Gartner analyst Pedro Pacheco told Reuters. He emphasized that success in AI requires becoming a “digital-first” organization, breaking down silos, and elevating technology leadership to the highest levels, including having software executives report directly to CEOs.

Pacheco added bluntly, “A company that is not great at software is inevitably going to struggle.” As the race for automotive AI heats up, the coming years may see clear winners and losers emerge, defined as much by organizational culture as by technological investment.