The government-led collaborative effort is said to include Honda, Nissan and Toyota, along local universities and suppliers such as Panasonic and Hitachi, according to a Nikkei report.
The initiative is aimed at giving Japan an edge in the race to bring fully autonomous vehicles to the market by the end of the decade.
Companies are expected to begin by standardizing software and sensors that will be central to all self-driving vehicles, potentially allowing the Japanese suppliers to catch up with German rival Bosch.
The team approach will also likely include common test courses where all three automakers can put prototype vehicles through trials to refine the technology for production.
The latest report claims Japanese officials are worried that the country could be put at a disadvantage if German or American automakers lead in developing industry standards for self-driving vehicles.
Alongside Japan’s self-serving collaboration, the automakers are likely looking beyond their home country to develop autonomous cars. Nissan recently signed a five-year research-and-development agreement with NASA, and all of the companies will likely be using a global supply chain for the necessary sensors and other components.