IBM and Honda Motor signed a memorandum of understanding on Wednesday to work on the long-term development and research of next-generation computing technologies, including processors and software for future automobiles.

According to a report from Nikkei Asia, the companies expect that the application of artificial intelligence for vehicles will “accelerate widely in 2030 and beyond” and introduce opportunities for the development of software-defined vehicles (SDV), operated by software “rather than enhanced by it” as vehicle manufacturers compete for autonomous driving technology.

Like smartphone software, SDV features are upgradeable remotely. Both firms expect SDV demand to rise. Thus, their research expands chip processing and reduces power consumption.

The Significance of Honda-IBM Alliance

Honda, a Japanese firm, pledged a record 1.19 trillion yen ($7.7 billion) in R&D for the fiscal year ending March, up 23% from the previous year.  At a press conference, Honda President Toshihiro Mibe remarked that the company will focus more on “development for electrification and software intelligence,” indicating that SDVs and electric cars are research priorities.

A Honda insider emphasized the importance of agreements like the one with the US tech company IBM since one manufacturer cannot develop and improve complex software technology alone.

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EV Sales Growth to Continue in the Coming Years

According to an International Energy Agency (IEA) estimate global electric vehicle (EV) sales will rise by more than 20% to 17 million units this year, driven by China.

The IEA believes “surging demand” for EVs over the next decade will redefine the global auto industry and significantly slash oil consumption for road transportation, per CNN. As charging infrastructure grows, the agency expects half of all cars sold worldwide to be electric by 2035, up from more than one in five this year. The IEA defines EVs as battery-electric and plug-in hybrids.

Chinese customers are not the only EV industry growth drivers. According to the European Automobile Manufacturers’ Association, the number of new battery electric cars sold in the EU grew by about 4% in the first quarter compared to 2023.

The IEA’s hopeful long-term view for EVs, based on existing government policies, follows Tesla, the world’s leading battery EV producer, cutting prices in major regions to address dropping sales and rising competition from Chinese startups and established carmakers.

Despite the positive outlook, EV manufacturers struggle with tight profit margins due to price wars and increased competition, as previously reported by TechTimes.

China Passenger Car Association statistics released by Reuters showed Tesla’s China-made electric car sales plummeted 18% year-over-year in April to 62,167 units, following a 30% drop in March.

BYD, Tesla’s major rival, led electric vehicle sales in April. It sold 49% more new energy cars last month, including approximately 330,000 battery-electric vehicles. The Chinese EV maker temporarily surpassed Tesla as the top EV seller in Q4 2023.

To increase its profile, Tesla reduced pricing and accelerated the launch of its driver assistance technology in China. After an unexpected visit to Beijing in late April, Tesla CEO Elon Musk obtained clearance to introduce the driver-assistance system in China.

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