AI Takes the Wheel at Europe’s Biggest Carmakers

Artificial intelligence (AI) is running on the production line, inside the vehicle and within the investment thesis. Europe’s premium automakers are moving on all fronts at once.

The pressure behind that movement is specific. Order-to-delivery flows across disconnected systems, multiple suppliers and dozens of handoffs. By the times teams learn about a delay, it has already hit the schedule. Inventory builds in the wrong place, small disruptions cascade and manual tracking fails at scale. AI fixes that by monitoring workflows in real time and triggering interventions before delays reach the customer.

AI Enters the Factory

Audi, BMW and Mercedes-Benz are running AI across production operations. Automotive News reported that all three brands use AI-powered image processing to detect welding defects in real time. Issues get flagged before they move down the line. Defect rates fall without slowing throughput.

BMW has gone further. Nvidia reported that BMW is deploying autonomous mobile robots inside its factories to handle material transport without human guidance. Parts move to the line as needed. The logistics layer coordinates itself.

BCG documented BMW Group’s generative AI program scaling across engineering, manufacturing and supply chain operations. The program compressed development timelines and reduced manual decision-making across the organization. The outcome was not incremental. It changed how the company moves information and acts on it.

Capital Follows the Conviction

BMW i Ventures launched its third fund at $300 million on Wednesday (April 29), bringing total capital under management to $1.1 billion. Fund III targets physical AI, agentic AI, industrial software, manufacturing technologies, supply chain technologies and advanced materials, investing from seed through Series B across North America and Europe.

Managing partner Marcus Behrendt said the firm focuses on what will actually determine the future, not what is trending. The AI Insider noted that BMW Group is already deploying humanoid robots at its Leipzig plant in Germany as part of a European pilot expanding physical AI in vehicle production, building on a 2025 program at its Spartanburg, South Carolina plant.

The fund backs startups early enough to shape how the technology develops. The thesis is direct: AI will define the next generation of automotive suppliers, and BMW wants equity in the companies building that layer now.

Intelligence Moves Into the Vehicle

The investment logic extends from the factory to the car itself. Mercedes-Benz announced a multi-year partnership with Liquid AI to deploy embedded, on-device intelligence across its vehicles in North America.

Liquid AI stated that the embedded Liquid Foundation Models deliver fast, private AI without cloud dependence, evolving the MBUX Virtual Assistant by integrating voice control, vehicle functionality and contextual understanding into a more capable in-vehicle experience. According to the release, initial production deployment is scheduled for the second half of 2026.

The architecture matters beyond the in-car experience. On-device AI processes data locally without sending it to a server. That same design principle applies upstream. AI running inside production systems does not wait for a nightly report. It reads the order queue, tracks supplier lead times, monitors assembly progress and flags the gap before it becomes a delay.

AI is not a feature added to an existing process. It is the coordination layer replacing manual oversight across the full order-to-delivery chain. For European automakers competing with software-native rivals from the United States and China, the window to build that infrastructure is not open indefinitely. BMW, Mercedes-Benz and Audi are treating that deadline as vital.

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