Artificial Intelligence in Japan: Policy, Prospects, and Obstacles in the Automotive Industry

Abstract

As artificial intelligence (AI) has progressed, it seems inevitable for countries and firms across the world to change their old notions and attitudes toward new technologies. Since AI could have a major impact on many aspects of business and society, the future competitiveness of nations, let alone of companies, will hinge upon the effective utilization of AI technologies. However, Japan is currently falling behind the USA and China in the global technology race. Many Japanese companies that were market leaders at some point have lost their position in the international market.

Toyota, the global leading car brand that also leads Japan’s automotive industry, is an exceptional case in the Japanese economy today. However, even Toyota is facing multiple challenges because AI is significantly changing the competitive landscape. Whereas the major carmakers have been keeping an eye on AI-directed self-driving cars, initially Toyota had some reservations about the development of self-driving cars. However, the company has recently changed its strategy. Despite sluggish government policies, Toyota has been accelerating its move into the new phase of competition with an unprecedented commitment to self-driving cars.

Toyota’s recent activities somewhat contrast with the slow response of the Japanese government and most Japanese firms to the global trend. This chapter first provides an overview of Japan’s AI, followed by the Japanese government’s plan for self-driving cars. The third section depicts Toyota’s recent activities, focusing on self-driving cars. Reflecting on Toyota’s strategic changes as a benchmark, the last section discusses what Japan needs to do in order to transform itself and compete in the digital age.