Hyundai Motor Co. Executive Chair Chung Euisun has warned of a tough year ahead for the global auto industry, and said the South Korean carmaker needs to upgrade its AI capability.

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 carmaker has been hard hit by U.S. President Donald Trump’s tariff regime, which has imposed a 15 per cent levy on Korean-made cars. That cost Hyundai about 1.8 trillion won (US$1.2 billion) in the third quarter alone.

Adding to the challenges, an immigration raid on a Hyundai-LG Energy Solution Ltd. plant in the U.S. in September is expected to delay construction by at least two to three months.

Chung also said Hyundai is falling behind rivals in the artificial intelligence race, calling for collaboration with a range of partners to ramp up its AI capability.

“If we look coldly at reality, leading global companies have already secured a dominant position in this field through investments worth hundreds of trillions of won, but the capabilities we have right now are not yet sufficient,” he said.

As part of its AI and robotics push, Hyundai launched the Robotics Lab in 2019 and acquired Boston Dynamics Inc. two years later. It plans to invest 125 trillion won in South Korea over the next five years in AI, robotics and other new technologies.

“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,” Chung said. “This is a powerful weapon unique to us that Big Tech companies can’t easily imitate.”

Motional, an autonomous driving joint venture with parts-maker Aptiv PLC, plans to commercialize fully driverless Ioniq 5 robotaxis in Las Vegas by the end of this year, Vice Chair Chang Jaehoon said.