Toyota and Nissan team up with Tencent and Baidu amid the competitive EV landscape

Two of Japan’s biggest automakers, Toyota and Nissan, announced on Thursday that they will be partnering with Chinese companies Tencent and Baidu, respectively. This cross-border partnership foregrounds the importance of AI for carmakers.

This proposed partnership highlights the attempt by Japanese manufacturers to come to terms with the technology shifts that have disrupted their privileged positions in the Chinese market.

While Japanese car companies held a prominent position in China until a few years ago, they have recently been put in a difficult spot as local manufacturers led by BYD have hogged a significant market share with software-laden electric vehicles aimed at a younger demographic.

When it comes to the country’s generative AI race, Tencent – a gaming and social media giant and Baidu – China’s leading search giant, are both leading players in this space.

Toyota, the world’s largest carmaker by volume, will include technology from Tencent in a China-made passenger vehicle that will hit the market this year, said Toyota’s Yiming Xu, Director of brand and communications for China. The companies will offer services through Tencent’s strengths in big data, AI and cloud computing, Xu said.

Nissan reported that it had signed a memorandum of understanding with Baidu to research AI and “smart cars”. Nissan is planning to utilise Baidu’s generative AI on its platform to study the feasibility of future tech developments and also equip its Chinese cars with Baidu’s AI products.

Both partnerships are a testament to the competitive landscape in China for automakers including global giants like Toyota. Meanwhile, foreign automakers are vying to remain relevant in China amid the rising number of domestic EV brands and the price war it has inadvertently triggered.

Recently, Toyota has witnessed decreasing sales even though they weren’t as intense as the blows faced by Honda Motor and Nissan. It saw its sales in China fall 1.7% to 1.9 million in 2023, which marks the second successive year of decline.