Japanese automakers Nissan (7201.T) and Honda (7267.T) announced on Monday that they would work together to develop standardized electronic control units (ECUs) for software-defined vehicles (SDVs), strengthening their partnership on more sophisticated automotive technologies.

According to a joint statement, the businesses want to implement an architecture in next-generation automobiles starting in the 2029 fiscal year that incorporates the jointly created ECUs and software.

As automobiles grow more connected and autonomous, software has emerged as a major battleground for automakers. Development costs are rising as automakers make significant investments in operating systems that enable services like over-the-air upgrades, driver assistance, and entertainment.

Chinese automakers like BYD (002594.SZ), which has gained market share in Europe and Southeast Asia with electric and hybrid vehicles loaded with cutting-edge software features, are another source of increased competitive pressure that is reflected in this shift.

The deal is the result of discussions that started in 2024 when Honda and Nissan agreed to work together on researching next-generation software systems. More than a year has passed since they called off merger negotiations that would have produced the fourth-largest manufacturer in the world.

According to Honda and Nissan, their goal is to create standard standards for core ECUs in the electrical and electronic architecture of their cars, together with operating systems, middleware, and vehicle-control software components.

Mitsubishi Motors (7211.T), Nissan’s alliance partner, stated in a new tab that it was thinking about joining the partnership and continued to talk with the two automakers about possible areas of cooperation.