Japanese automakers are shifting from a pure BEV focus to parallel advancement of HEV, SDV, and ADAS/AD

Overview

This report is Bernstein's conference note and industry technology observation on Automotive Engineering Exposition 2026 in Japan. The exhibition was organized by the Society of Automotive Engineers of Japan under the theme "Collaborate for Future Mobility," covering automakers, suppliers, materials companies, and software developers. The report focuses on the long-term technology direction of Japan's auto industry in electrification, intelligence, SDV, ADAS/AD, and carbon neutrality.

Core views

The core view is that Japanese automakers are shifting from a single-BEV narrative toward a more pragmatic multi-path combination of HEV, PHEV, and BEV, while positioning SDV, ADAS/AD, and autonomous driving capabilities as the next stage of differentiation. Suppliers, meanwhile, are supporting the vehicle transition through foundational technologies such as power semiconductors, thermal management, battery management, in-vehicle computing, sensors, and rare-earth-substitute motors.

Analysis framework

The report uses on-site research and technical teardown of company booths, covering companies under coverage such as Toyota, Suzuki, Honda, Nissan, Mazda, Subaru, Denso, and Aisin, while also observing non-covered companies such as Mitsubishi Motors, Hino Motors, Isuzu Motors, Toyoda Gosei, Ichikoh Industries, Astemo, Magna, and Bosch. The analytical focus is not short-term sales, but rather technology roadmaps, mass-production timelines, supply-chain positioning, and implications for medium- to long-term competitiveness.

Methodology notes

• Industry technology roadmapMulti-path electrification

  Parallel advancement of HEV, PHEV, and BEV

  The report argues that Japanese automakers are not betting solely on BEVs, but are seeking a more resilient combination across stronger HEVs, upgraded PHEVs, and selective BEV advancement.

• Intelligent architectureSDV

  Software-defined vehicle

  SDV improves vehicle iteration speed and software service capabilities through in-vehicle operating systems, centralized computing, OTA, cloud-based digital twins, and application development platforms.

• Autonomous drivingADAS/AD and NOA

  Advanced driver assistance and autonomous driving

  The report views the formal launch of NOA in major regions as a key future observation point, and notes that Toyota, Nissan, Honda, and Mazda all demonstrated related capabilities.

• Supply-chain foundational technologySiC power semiconductors

  Key devices for improving electric-drive efficiency

  The SiC power semiconductors and double-sided cooling inverter showcased by Denso can significantly reduce power loss, supporting improvements in EV range and performance.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Toyota Motor

  Covered company; key observation target for multi-path strategy and SDV

  Strengths

  The sixth-generation RAV4 offers only HEV and PHEV, equipped with Arene and the latest Toyota Safety Sense; the PHEV system improves efficiency, with pure EV range increased to 151 km.

  Weaknesses

  BEV penetration remains low at only about 2% in FY3/26, and it needs to prove its ability to accelerate.

  Comparison

  Compared with more aggressive BEV strategies, Toyota places greater emphasis on a multi-path approach combining HEV, PHEV, BEV, and infrastructure.

  Risks

  Slower-than-expected BEV acceleration, SDV rollout lagging competitors, and a longer commercialization cycle for autonomous driving and infrastructure coordination.

• Suzuki

  Covered company; observation target for carbon neutrality and compact mobility platforms

  Strengths

  Showcased CARBON CAPTURE CARRY and MITRA, highlighting differentiation in small vehicles, agricultural scenarios, and multi-purpose electric platforms.

  Weaknesses

  The exhibits were more conceptual and exploratory, with limited evidence of near-term earnings contribution.

  Comparison

  Compared with the SDV and ADAS focus of larger automakers, Suzuki emphasizes lightweight, compact, and carbon-neutral scenarios.

  Risks

  Uncertainty around mass production and commercialization of concept technologies, and the cost and use cases of carbon capture vehicles need validation.

• Honda

  Covered company; observation target for BEV experience, NOA, and safety technologies

  Strengths

  Super ONE enhances the driving experience through e-Dash Booster, while Honda WN7 expands into electric motorcycles; it also showcased highway NOA and CI-based driver assistance.

  Weaknesses

  The report notes that companies such as Honda are reducing or delaying some EV development and investment, indicating a more cautious BEV pace.

  Comparison

  It has distinctive strengths in safety and driving experience, but its electrification investment pace is more conservative than some global competitors.

  Risks

  An EV slowdown may weaken long-term BEV competitiveness, while commercialization of NOA and AI-assisted driving still requires validation.

• Nissan

  Covered company; observation target for e-POWER, solid-state batteries, and next-generation ProPILOT

  Strengths

  Third-generation e-POWER has become a core electrification axis; the 3-in-1 EV powertrain, solid-state batteries, and next-generation ProPILOT demonstrate technology reserves.

  Weaknesses

  The stock is rated Underperform, indicating that the technology showcase has not fully offset fundamental pressures.

  Comparison

  Nissan is relatively distinctive in e-POWER and autonomous driving, but needs to translate this into better sales and profit improvement.

  Risks

  Execution risk remains for FY2028 commercialization of solid-state batteries, and timelines for ProPILOT and robotaxi testing may be delayed.

• Mazda

  Covered company; observation target for the new CX-5 and SDV architecture

  Strengths

  The new CX-5 is equipped with MAZDA E/E ARCHITECTURE+ and Google built-in, and is expected to contribute about half of FY3/27 target sales growth.

  Weaknesses

  The Underperform rating indicates that product-cycle improvement still faces earnings and competitive pressure.

  Comparison

  Mazda is entering SDV through the new CX-5, but its scale and software ecosystem resources are relatively limited versus larger automakers.

  Risks

  New CX-5 sales contribution coming in below expectations, a long payback period for SDV investment, and difficulty for traditional ICE efficiency improvements to withstand electrification competition.

• Subaru

  Covered company; observation target for S:HEV and AWD safety/stability

  Strengths

  S:HEV combines a 2.5L horizontally opposed engine, transaxle, and Symmetrical AWD, reinforcing its positioning in safety and driving stability.

  Weaknesses

  The technology showcase was relatively concentrated, and the stock is rated Underperform.

  Comparison

  Compared with the broader SDV/AD showcases of Toyota and Nissan, Subaru is more focused on hybrid and AWD core capabilities.

  Risks

  Insufficient hybrid technology differentiation and inadequate progress in BEV and software capabilities.

• Denso

  Covered company; core supply-chain asset for electrification and SDV

  Strengths

  SiC power semiconductors, double-sided cooling inverters, battery monitoring, Zone ECU, Duo digital twins, and industrial LiDAR cover electrification and SDV infrastructure.

  Weaknesses

  FY3/27 OP forecast was cut from JPY644 bn to JPY599 bn, reflecting short-term earnings pressure.

  Comparison

  Compared with traditional parts suppliers, Denso has stronger system capabilities in power semiconductors, thermal management, and automotive electronics.

  Risks

  SiC mass-production ramp-up, automaker pricing pressure, and balancing R&D investment with margins.

• Aisin

  Covered company; supplier of hybrid transmissions and chassis control

  Strengths

  Series-parallel hybrid transmissions support HEV efficiency and power performance; active rear-wheel steering improves high-speed stability and low-speed maneuverability.

  Weaknesses

  FY3/27 OP forecast was cut from JPY269 bn to JPY250 bn, and the target price was lowered to JPY2,450.

  Comparison

  Aisin's strengths are more in the integration of mechanical, electric-drive, and chassis control, rather than software platforms.

  Risks

  Volatility in HEV-related demand, structural pressure on traditional transmission systems, and cost improvements falling short of expectations.

Key data

• Exhibition venue and dateYokohama，2026-05-29Bernstein visited the exhibition as part of the Japan Auto Tech Tour.
• Number of exhibiting companies612 companiesThe exhibition covered automakers, suppliers, materials companies, and software developers.
• 2025 visitor countNearly 80,000 peopleUsed to illustrate the scale of the exhibition in Japan's mobility technology field.
• Toyota BEV penetration forecast2% in FY3/26, rising to 6% in FY3/27The report believes Toyota still adheres to a multi-path strategy, but BEV advancement has accelerated somewhat.
• Toyota new PHEV pure EV range151 km, versus 95 km for the previous generationEfficiency and space were improved through SiC semiconductors, reduced driveline losses, and PCU integration.
• Daihatsu e-Atrai battery and range36.6 kWh LFP, WLTC 257 kmTargeting penetration in light commercial BEVs and kei-vans.
• Daihatsu DC microgrid energy-saving effectAbout 45% reduction in energy lossAchieved by reducing power conversion steps.
• Nissan solid-state battery targetCommercialization in FY2028The company has completed onboard cell and module design and is conducting evaluation.
• Nissan next-generation ProPILOTTargeting commercialization in Japan in 2027The system is planned to cover both highways and urban roads, and is associated with L4 robotaxi testing.
• Denso SiC power semiconductorsAbout 70% lower power loss than conventional Si, with 8-inch SiC wafer mass production expected in 2027Helps improve EV range and electric-drive system efficiency.
• Mazda new CX-5 contributionAccounts for about half of FY3/27 target sales growthThe new model is equipped with MAZDA E/E ARCHITECTURE+ and Google built-in, reflecting the SDV transition.
• Major ratings and target pricesSuzuki Outperform JPY2,550；Toyota Market-Perform JPY4,200；Honda Market-Perform JPY1,400；Nissan Underperform JPY350；Mazda Underperform JPY1,000；Subaru Underperform JPY2,350；Denso Market-Perform JPY2,050；Aisin Market-Perform JPY2,450Aisin's target price was cut from JPY2,750 to JPY2,450; both Denso and Aisin adjusted their FY3/27 OP forecasts.

Impact & implications

For investors, signals from the exhibition indicate that the competitive focus of Japan's auto industry is shifting from pure electrification penetration toward a broader competition in powertrain efficiency, software platforms, assisted driving, in-vehicle computing, and supply-chain resilience. Whether automakers can rapidly mass-produce NOA, SDV, and HEV/PHEV technologies and translate them into model competitiveness will affect medium-term earnings elasticity; whether suppliers can secure mass-production share in SiC, thermal management, battery management, sensors, and centralized computing platforms will affect valuation support.

Risks

• Stronger HEV focus may delay long-term competitiveness building in BEV and software ecosystems for some companies.
• Mass-production timelines for SDV, NOA, ADAS/AD, and autonomous driving face technology, regulation, and safety-validation risks.
• Mass-production yield, cost, and supply-chain stability of key technologies such as SiC, solid-state batteries, and rare-earth-free motors still need to be monitored.
• Technology showcases at exhibitions do not equate to commercial success, and near-term earnings contribution may be limited.
• The yen, raw materials, tariffs, and global demand volatility may affect the profitability of automakers and parts suppliers.

What to watch

• The timeline and functional coverage for Japanese automakers' formal NOA launches in major regions.
• Whether Toyota's FY3/27 BEV penetration can rise to 6%, and market acceptance of the new RAV4 PHEV.
• Progress of Nissan's third-generation e-POWER, next-generation ProPILOT, L4 robotaxi testing, and FY2028 solid-state batteries.
• Progress of Denso's 8-inch SiC wafer mass production in 2027 and customer expansion for SiC inverters.
• The actual contribution of Mazda's new CX-5 to FY3/27 sales growth and profit.
• Installation rates of Aisin's hybrid transmissions and active rear-wheel steering in HEVs and premium models.
• Order conversion for suppliers in sensors, OTA, centralized computing, and in-vehicle software platforms.