Key takeaways
Technology gaps create hidden costs
Development speed affects competitiveness
Cost reduction must be balanced with innovation
Digital capabilities shape customer offerings
Technology investment should deliver measurable business value
The real cost of falling behind in automotive technology
The automotive industry faces a growing challenge: controlling costs while investing in the technology needed to remain competitive. As vehicles become increasingly software-driven and international competition intensifies, gaps in digital capabilities can affect development speed, production efficiency, product quality and customer offerings. Reducing technology expenditure may deliver short-term savings, but failing to modernise can create longer-term operational and competitive costs.
Competitive pressure is changing the cost equation
Chinese manufacturers are expanding internationally while competing on price, product features and technology. BYD‘s global vehicle sales increased 17.8% year-on-year to 440,293 vehicles in August 2026, while overseas shipments surged 134.5% to 189,466 vehicles (Reuters, 2026a). This represented four consecutive months of sales growth.
International markets are becoming increasingly important to BYD. During the first half of 2026, the company generated more revenue overseas than in China for the first time. Brazil became its largest overseas market, while Europe and Southeast Asia also contributed to its expansion (Reuters, 2026a). These figures illustrate the pressure on established manufacturers. Competitiveness increasingly depends on balancing production costs with the ability to develop attractive products, expand into new markets and respond quickly to customer demand.
When technology gaps become business costs
Technology gaps can create costs that are difficult to identify in individual budget lines. Disconnected systems, manual data transfers and repetitive tasks consume employee time, increase the risk of errors and slow decisions. In vehicle development, inefficient workflows can also delay product launches and new features. Suzuki’s strategy demonstrates how development efficiency can become a measurable business objective. The Japanese automaker aims to halve new-vehicle development time by around 2030 compared with fiscal 2020, while improving development and production efficiency (Reuters, 2026b).
Shorter development cycles can help manufacturers respond faster to market changes and reduce the time required to bring products to customers. Conversely, fragmented processes and outdated systems can limit flexibility and delay innovation. Although Suzuki’s target does not quantify the cost of technology gaps, it highlights the importance of development speed as a strategic priority. Technology capabilities also shape the products manufacturers can offer. The Chinese autonomous-driving software developer Momenta had entered a global strategic partnership with Dongfeng Stellantis Automotive Technology, a Stellantis joint venture in China. The collaboration aims to develop intelligent-driving technology for Jeep and Peugeot vehicles, with applications intended for China, Europe and other markets (Reuters, 2026c).
The partnership illustrates how manufacturers are collaborating with specialised technology companies rather than relying exclusively on internal development. Limited software expertise or development resources can make it harder for automakers to keep pace with evolving customer expectations.
The trade-off between savings and investment
Cost reduction remains essential when manufacturers face margin pressure. However, reducing technology investment without assessing its operational impact can preserve cash in the short term while leaving inefficiencies unresolved.
Honda illustrates the scale of this challenge. The company aims to save ¥1.5 trillion (approximately US$9.4 billion) by 2030 and has instructed suppliers to target 30% cost reductions in pressed and forged components, electrical parts, and components related to software-defined vehicles (Reuters, 2026d). The pressure extends beyond purchasing costs. Reuters reported that Honda expected its EV-related losses ultimately to exceed US$12 billion and was shifting its focus towards gasoline-electric hybrids. Honda has also promoted standardised components and greater use of Chinese-sourced parts to improve competitiveness (Reuters, 2026d).
Honda’s example highlights the tension between reducing expenditure and funding technological change. Standardisation and more efficient sourcing may support savings, but indiscriminate cuts can risk weakening the capabilities required for future products. The objective should be to eliminate waste without sacrificing the technology and skills that support competitiveness.
Turning technology into business value
Manufacturers should evaluate technology investments by their impact on business performance, not simply their initial purchase price. Priorities can include identifying manual processes, duplicated work, disconnected systems and recurring development bottlenecks.
Results should be measured through development-cycle length, downtime, defect rates, processing time and total operating costs. These indicators help determine whether investments deliver measurable improvements and whether their benefits justify the expenditure. BYD‘s export growth, Honda’s savings programme, Suzuki’s development-time target and Stellantis’ technology partnership illustrate different responses to an increasingly competitive industry. They do not prove that technology investment alone guarantees success, but they demonstrate why manufacturers must connect cost decisions with operational and strategic objectives.
