The transportation landscape is undergoing a rapid transformation, with a noticeable shift in focus towards autonomous vehicles and “physical AI” as evidenced by the 2026 Consumer Electronics Show (CES) in Las Vegas. Traditional automakers have significantly reduced their presence at the event, making way for companies specializing in self-driving technology, robotics, and advanced automotive software. This change signals a broader industry trend: a move away from solely hardware-focused innovation towards integrating artificial intelligence into the physical world of transportation.
This year’s CES highlighted a surge in companies developing and showcasing technologies related to autonomous systems. Notably, firms like Zoox, Tensor Auto, Tier IV, and Waymo – which recently rebranded its Zeekr RT vehicle – were prominent exhibitors. Alongside them, a strong showing from Chinese automakers such as Geely and GWM, as well as automotive chip and software developers, underscored the global competition in this space. Nvidia CEO Jensen Huang coined the term “physical AI” to describe this integration, emphasizing the combination of AI models with sensors, cameras, and motorized controls to enable real-world operation of robots and vehicles.
The Rise of Physical AI and Robotics in Transportation
Hyundai’s expansive exhibit at CES wasn’t filled with cars, but rather a diverse array of robots, including the Atlas humanoid robot developed by its subsidiary, Boston Dynamics. The company also showcased innovations from its Hyundai Motor Group Robotics LAB, such as a robot designed to charge electric autonomous vehicles and the Mobile Eccentric Droid (MobEd), a four-wheel electric platform slated for production this year. This focus on robotics, particularly humanoids, was a recurring theme throughout the show, generating considerable excitement.
The hype surrounding humanoids and physical AI isn’t necessarily unfounded, according to industry experts. Mobileye co-founder and president Amnon Shashua drew a parallel to the early days of the internet, acknowledging the potential for overvaluation but asserting the fundamental validity of the technology. “Hype means that companies are overvalued for a certain period of time, and then they crash,” Shashua stated. “It does not mean that the domain is not real.”
Several key announcements emerged from CES. Nvidia launched Alpamayo, new open AI models designed to enhance the “thinking” capabilities of autonomous vehicles. Uber unveiled a new robotaxi developed in partnership with Lucid and Nuro. Additionally, Mobileye acquired humanoid robotics startup Mentee Robotics for $900 million, demonstrating a significant financial commitment to the field. Luminar, however, experienced a setback, selling its lidar business to Quantum Computing Inc. for a comparatively modest $22 million.
Recent Developments and Regulatory Hurdles
Beyond CES, recent news indicates ongoing shifts in the automotive industry. Former President Trump’s comments regarding welcoming Chinese automakers into the United States have sparked concern among industry stakeholders. Sources indicate that the Alliance for Automotive Innovation, the industry’s lobbying group, is “freaking out” over the potential implications. Trump expressed support for Chinese and Japanese companies establishing manufacturing plants in the U.S., potentially creating jobs.
However, existing regulations pose a significant challenge to this scenario. A 2025 rule from the U.S. Department of Commerce restricts the import and sale of connected vehicles linked to China or Russia, effectively barring Chinese vehicles from the U.S. market. Avery Ash, CEO of SAFE, cautioned against reversing these protections, arguing that allowing Chinese automakers to operate in the U.S. could jeopardize national security and harm the domestic automotive industry.
In contrast, Canada is taking a different approach, announcing plans to reduce import taxes on Chinese electric vehicles. This move, reported by Sean O’Kane, could open the Canadian market to increased competition from Chinese manufacturers. Meanwhile, Motional, a Hyundai-backed autonomous vehicle company, has undergone a reboot, focusing on an AI-first approach to self-driving technology.
Other notable deals include Allegiant’s acquisition of Sun Country Airlines for $1.5 billion, and Dealerware’s acquisition by a group led by Wavecrest Growth Partners. Flix is expanding its reach through an acquisition of a majority share in Flibco, and Wing is broadening its drone delivery partnership with Walmart to 150 additional stores. Tesla is also transitioning to a monthly subscription model for its Full Self-Driving (Supervised) software.
The future of transportation remains dynamic and uncertain. New York governor Kathy Hochul is expected to introduce legislation next week that would legalize robotaxis throughout the state, excluding New York City. This proposal, if enacted, could accelerate the deployment of autonomous vehicles in the region. The industry will be closely watching for further regulatory developments, technological advancements, and the evolving competitive landscape, particularly concerning the role of Chinese automakers and the continued development of artificial intelligence in autonomous driving and related fields. The success of these ventures will depend on navigating complex regulatory hurdles, securing continued investment, and demonstrating the safety and reliability of these emerging technologies.
