Toyota Races to Catch Up in "Smartphone on Wheels" Revolution

Toyota and other Japanese automakers are scrambling to partner with telecom giants and tech companies to develop the next generation of software-heavy vehicles, aiming to close the gap with Chinese and US competitors in the burgeoning "smartphone on wheels" market, reports Nikkei Asia.

Toyota President Koji Sato, at a late October press conference announcing a partnership with Nippon Telegraph and Telephone (NTT) in AI and other areas, emphasized the need for cross-industry collaboration. Following Sato's call, the heads of KDDI and SoftBank, Japan's other major mobile carriers, expressed their interest in participating.

This push to strengthen ties with telecom giants reflects the rapid advancements in software-defined vehicles (SDVs) being made by US and Chinese automakers. SDVs, characterized by their ability to receive software updates and feature upgrades after purchase, are fundamentally redefining the automotive industry.

"It might be nice to have a vehicle like a smartphone with wheels," stated former Toyota President Akio Toyoda at the 2011 Tokyo Motor Show, introducing the Fun-Vii concept vehicle. However, it was Chinese smartphone maker Xiaomi that brought this vision to fruition with its SU7 electric vehicle, which received nearly 90,000 reservations in a single day prior to its release last March. Huawei Technologies, another major player, has also established its own automotive development business.

SDVs are not only changing what a car can do but also how it's made. "New cars only need to be equipped with the bare minimum of functions, reducing parts and associated costs," explains Hitoshi Kaise, partner at Roland Berger.

This shift in focus necessitates a major transformation for Japanese automakers. Toyota, for example, is collaborating with NTT to develop a communications platform using AI to improve driver safety. The company is also investing in domestic semiconductor production to secure access to cutting-edge chips.

Toyota is further accelerating its operating system development, with software-related jobs comprising over 20% of its current recruitment postings. Honda Motor, in partnership with SCSK, is working on in-vehicle software for EVs and autonomous cars, aiming to have 1,000 engineers dedicated to this effort by 2030. Nissan Motor is partnering with Tata Consultancy Services to train engineers in both automotive and software development.

However, transitioning to a software-centric approach presents significant challenges for established automakers. "Up until now, automakers have often had mechanical engineering heads," notes Professor Hiroaki Takada of Nagoya University. "The development approach to conventional cars and SDVs is different, and it will be difficult to respond unless there is a broader understanding of software."