Japanese car manufacturers are readjusting their strategic direction to maintain their global market share. The automotive industry is facing a dual attack from Chinese subsidies driving a price war and American carmakers’ technological innovation.
On Thursday (August 1), Japanese automotive giants Honda and Nissan officially announced that they have signed a memorandum of understanding for cooperation in the electric vehicle (EV) sector.
On the same day, Mitsubishi also announced signing a memorandum of understanding to join Honda and Nissan’s collaborative framework. In March of this year, Honda and Nissan announced considerations for comprehensive cooperation, but at that time, Nissan’s intention regarding its 34% stake in Mitsubishi Motors was not confirmed.
Subsequently, Honda President Toshihiro Mibu and Nissan President Makoto Uchida held a press conference in Tokyo to unveil the specific details of their cooperation.
According to reports from NHK, the goal of their collaboration is to jointly develop foundational in-car software technology for the next generation of smart cars and achieve standardization of key components for electric vehicles.
Under the agreement, the two companies will jointly develop in-car operating systems (OS) and other foundational software technologies that are crucial for next-generation software-defined vehicles (SDV). Next-gen smart cars can continuously enhance their functionalities and performance through software updates.
If the collaboration yields results, both companies will consider the possibility of mass production.
Additionally, the two companies will also explore the standardization and mutual supply of electric vehicle battery specifications, aiming to achieve commonality of key components such as electric vehicle drive motor systems (E-Axle).
During the press conference on that day, Honda President Toshihiro Mibu stated, “We hope that by integrating the technologies of both companies, we can achieve economies of scale and cost efficiencies in development, stand out early among emerging manufacturers, and take a leading position. Therefore, we believe it is most important to establish the capacity to lead in new technologies for global smart and electrified vehicles.”
Nissan Motor Company CEO Makoto Uchida added, “The value of future cars will change. How can we create competitiveness in response to this change? To do so, we must elevate our technological levels, foster a shared sense of urgency, and create a business model that can defeat our competitors.”
Chinese automakers such as BYD are expanding rapidly with support from the Chinese government’s policies and substantial subsidies, leading to intensifying price wars in the Chinese auto market. Japanese carmakers are facing increasing pressure on market share and survival space in China.
In June of this year, Honda and Nissan saw sales drops of approximately 40% and 27%, respectively, in China, leading both companies to partially shut down their operations in the country. Last week, Honda decided to cut its fuel car production capacity in China by 19%. In October of last year, Mitsubishi Motors formally decided to fully withdraw from the Chinese market.
In the global electric vehicle market, continued heavy investment from foreign competitors like Tesla and BYD and advancements in automotive software development pose challenges to Japanese car manufacturers in terms of development costs and production volumes.
In 2023, Tesla’s global sales of Battery Electric Vehicles (BEV) reached 1.8 million, BYD reached 1.57 million, Nissan at 140,000, and Honda only at 19,000. Honda and Nissan rank as the second and third largest Japanese auto manufacturers, following Toyota.
Through this cooperation, Honda and Nissan aim to reduce the development and acquisition costs of key components such as in-car software and drive motor systems, thereby enhancing their competitive edge against rivals.
In May of this year, the Japanese government announced a new strategic goal to increase Japanese manufacturers’ global market share of “software-defined vehicles (SDV)” to 30% by 2030. The Ministry of Economy, Trade, and Industry will provide financial support and assist in nurturing IT engineers through collaborations with universities and the launch of reskilling programs.
Simultaneously, the Japanese government is encouraging domestic car companies to engage in cooperative efforts in seven major areas that are challenging to independently develop. These areas include semiconductors, application programming interfaces (APIs) connecting automotive software and systems, simulations, generative AI for vehicle inspection, cybersecurity measures, high-precision 3D mapping, and radar measurement technology for vehicle and object or pedestrian detection.