Physical AI Gains Momentum in Automotive and Robotics Sectors

Physical AI is being adopted across the automotive and robotics industries, with companies introducing new technologies and partnerships to advance autonomous systems and real-time decision-making.

Arm Holdings established a new business unit called Physical AI during CES 2026, bringing together its work in automotive and robotics. The company stated that this unit will address the overlapping hardware and sensor needs of both sectors, aiming to streamline development for autonomous technologies.

At the same event, Boston Dynamics, a subsidiary of Hyundai, presented a next-generation Atlas humanoid robot. This robot uses reinforcement learning to refine its movements, which is recognized as a key feature of physical AI systems.

NVIDIA describes Physical AI as the integration of sensors, hardware, and artificial intelligence software, enabling autonomous machines such as self-driving cars to perceive, reason, and act in the physical world. According to the company, these systems use multimodal inputs and physics-based simulations to operate effectively in dynamic environments.

What the numbers show

• Arm Holdings launched its Physical AI unit at CES 2026
• XPENG plans to introduce three robo-taxi models in China in early 2026
• NVIDIA and General Motors announced their partnership at GTC 2025

Physical AI systems are being applied in automotive design and testing by using high-fidelity 3D simulations. These simulations allow for virtual stress tests and rapid optimization of vehicle components, supporting faster development cycles and improved safety assessments.

In the automotive sector, Physical AI enables vehicles to process sensor data in real time with models that combine vision, language, and action reasoning. This approach is intended to improve perception and decision-making in varied driving conditions, moving beyond simple object detection to more complex reasoning, such as predicting the presence of hidden obstacles.

NVIDIA’s CEO announced at GTC 2025 that the company had entered a partnership with General Motors to integrate AI, simulation, and accelerated computing into automotive systems. The announcement stated that this collaboration would focus on advancing Physical AI within the automotive industry.

XPENG has outlined plans to deploy three fully driverless robo-taxi models in China in early 2026, using its VLA 2.0 and VLM technologies as part of its Physical AI strategy. These developments reflect ongoing efforts among automotive manufacturers to incorporate advanced AI capabilities into commercial vehicles.

* This article is based on publicly available information at the time of writing.