Honda and Nissan sign deal to co-develop vehicle software

Honda ↘ 1.12% and Nissan announced on Monday that they have signed a joint development agreement to standardize core electronic control units and software for next-generation vehicles, marking a formal reconciliation between two automakers whose merger talks collapsed more than a year ago.

A New Chapter in Collaboration

Under the agreement, the two Japanese automakers will co-develop common specifications for multiple ECUs that form the backbone of software-defined vehicles, along with the in-vehicle operating system, key middleware components, and vehicle-control software. The jointly developed architecture is planned for deployment in both companies' next-generation vehicles from fiscal year 2029 onward.channelnewsasia+1

"By standardizing these foundational technologies, Nissan and Honda aim to leverage their combined engineering expertise and development resources to improve efficiency, accelerate innovation, and enhance competitiveness through reduced development costs and greater economies of scale," the companies said in a joint statement. Mitsubishi Motors, Nissan's alliance partner, said it was considering joining the collaboration.global+1

The deal follows more than two years of incremental cooperation. In 2024, the companies signed a memorandum of understanding to explore joint work on SDV platforms, batteries, and electrification. They later entered full merger talks that would have created the world's fourth-largest automaker, but those discussions fell apart. Despite the collapse, the two sides continued project-level discussions, leading to the agreement formalized Monday.wardsauto+5

Honda's Three-Year Roadmap

Separately, Honda has outlined a sweeping three-year plan to rebuild its automobile business. The company is targeting consolidated operating profit exceeding ¥1.4 trillion by the fiscal year ending March 2029, which would be an all-time high. To get there, Honda will reallocate resources toward hybrid vehicles, launching 15 next-generation hybrid models globally by March 2030, starting in 2027.vocal+1

Honda plans to reduce the cost of its next-generation hybrid system by more than 30% compared to 2023 levels and improve fuel economy by more than 10%. The company is also converting part of its joint-venture EV battery lines with LG Energy Solution to hybrid battery production and reallocating excess capacity at its Ohio plants to gasoline and hybrid vehicles.vocal

Efficiency and Investment

Through what Honda calls a "Triple Half" approach, the company aims to cut development cost, timeframe, and workload by half compared to 2025 levels, using digital tools and AI. Over the next three years, Honda will invest ¥6.2 trillion, with ¥4.4 trillion directed toward gasoline and hybrid vehicles, ¥1.0 trillion toward software, and ¥0.8 trillion toward EVs. The company has indefinitely suspended its Canadian EV value chain project to reassess procurement strategy.vocal

Honda has also identified North America, Japan, and India as priority markets, with plans to expand its EV lineup in Japan's kei car segment and leverage its motorcycle business in India, where it sells nearly 6 million units annually, to capture customers moving up to automobiles.vocal