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Japan Unveils New Automotive Strategy: Aims for 30% Global Share of SDVs by 2030
Jul 16,2025
On May 20, 2024, Japan’s Ministry of Economy, Trade and Industry (METI) officially announced a new strategic roadmap for the digital transformation of its automotive industry. The plan outlines an ambitious goal for Japanese automakers to sell 12 million Software-Defined Vehicles (SDVs) domestically and globally by 2030. To achieve this, Japanese car manufacturers will jointly develop key technologies, including semiconductors and artificial intelligence (AI).
Japan intends to strengthen its production capabilities to ensure SDVs account for 30% of the global market. Major automakers such as Toyota, Nissan, and Honda will collaborate on next-generation vehicle technologies. The “Mobility Digital Transformation Strategy” was jointly presented by METI and the Ministry of Land, Infrastructure, Transport and Tourism during a policy meeting on May 20.
The strategy focuses on three core areas: SDVs, autonomous ride-hailing vehicles, and the utilization of automotive data.
Industry Transformation Required
A key goal of the strategy is to boost Japan’s share in the global auto market through the advancement of SDV technology. The plan encourages joint development among automakers to stay competitive in the evolving landscape. However, Japan’s traditional keiretsu system—a vertically integrated industrial structure—poses a challenge. Realizing this next-generation vision will require a fundamental transformation of the industry’s organizational framework.
SDV stands for “Software-Defined Vehicle”—a new category of cars where the vehicle’s functionality can be enhanced even after purchase via software updates. Features like collision avoidance or lane-keeping assistance can be continuously improved, adding long-term value to the vehicle through digital upgrades.
| SDV Strategies of Major Automakers | ||
| Toyota | Starting in 2025, Toyota will introduce SDV capabilities in select models powered by its proprietary operating system, Allyne OS. | |
| Honda | Honda plans to equip its electric vehicles (EVs) with SDV functions around 2026. The company is collaborating with Japanese IT firm SCSK to co-develop autonomous driving software. | |
| Nissan | Nissan is targeting a 2025 launch for its SDV-enabled vehicles. The company is currently exploring enhancements in advanced driver-assistance systems (ADAS) as part of its broader SDV roadmap. | |
| Tesla | Tesla vehicles are already equipped with SDV functionality. Performance improvements, such as enhanced braking, can be delivered via over-the-air (OTA) software updates. | |
| BYD | China's BYD is advancing in SDVs with in-house chips and software. Partnering with local tech firms, it offers strong smart driving features, mainly in China but with global aspirations. | |
Global SDV Race Accelerates as Japan Seeks to Catch Up
Globally, companies like Tesla and BYD have already launched SDVs (Software-Defined Vehicles) into the market. In contrast, Japanese automakers have been slower to act. Industry giants such as Toyota and Honda plan to roll out full-scale SDVs starting in 2025. To accelerate progress, Japan’s Ministry of Economy, Trade and Industry (METI) has called on domestic manufacturers to jointly develop technologies in seven key areas, including semiconductors and generative AI—fields where individual differentiation is limited.
The SDV sector, driven heavily by digital technologies, has outgrown Japan’s traditional keiretsu supply chain model, which is characterized by vertically integrated relationships between automakers and parts suppliers. This structure is becoming increasingly inadequate for handling the complexity and pace of SDV development.
A senior METI official commented, “Manufacturers are beginning to move beyond company-centric thinking and are placing greater value on digital collaboration.” The technical scope of SDVs is so broad that it is no longer feasible for a single company to pursue development independently.
In practice, this shift has already begun. In December 2023, a semiconductor research consortium was launched with 14 member companies, including Toyota and Honda. Separately, Honda has partnered with Japanese system integrator SCSK to co-develop autonomous driving software. As a result of the government's strategy, automakers are now expected to collaborate on sharing AI training data for autonomous driving, as well as jointly developing digital talent.
However, there are still areas where companies plan to compete independently. One such field is the development of automotive operating systems (OS)—the core software that drives SDVs. These systems are considered a “competitive domain” due to their strategic importance in controlling the entire SDV ecosystem. Toyota is developing its proprietary Allyne OS, while Honda is also working on its own in-house platform. Just as Apple’s iOS became the gateway to the smartphone app ecosystem, automakers see automotive OS as the key to securing digital dominance in the SDV era.
Looking ahead, Japan will also need to tap into overseas IT expertise. Sanshiro Fukao, a senior research fellow at Itochu Research Institute with deep experience in the automotive sector, noted, “To succeed in SDV strategy, Japanese automakers must not only collaborate domestically, but also build strategic partnerships with leading U.S. tech firms and other global players.
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