Japan’s hybrid dominance hinders electric vehicle uptake

Nissan Leaf electric vehicle cross section on display during the 2015 Amsterdam motor show.

As the race to put more EVs on the road continues to increase in markets such as China, the United States and the United Kingdom, the pedal is nowhere near the metal yet in Japan, where hybrid still holds the title of being the supreme.

59,000 new EVs were sold in Japan last year, a record and a three-fold annual increase, however still less than two percent of sales of all cars in the country in 2022.

Given Japan’s auto industry pioneered hybrid and electric cars, which employs eight percent of the country’s workforce, and accounts for a quarter of all its exports, it’s a situation that might seem counterintuitive.

According to experts, the popularity of hybrids has actually hindered uptake of EVs, with Japanese automakers in no hurry to abandon existing line-ups.

It’s no secret that there is scepticism, and the former CEO of Toyota, the top-selling automaker in the world, frequently questioned the increasing emphasis on electric.

“I think Toyota didn’t want the trend to tilt towards plug-in hybrids and electric vehicles because of their focus on hybrids and also their significant investment,” said Kenichiro Wada, president of the Japan Electrification Research Institute, who helped develop early EVs at Mitsubishi Motors in the 2000s.

He compared the company to a top-ranking sumo wrestler, eager to “maintain the status quo for as long as possible”.

Atsuki Ikeda is a man who loves his car so much that he founded a club for Tesla owners, but his embrace of an electric vehicle makes him something of an outlier in Japan.

Ikeda turned to Tesla when he was in the market for a car that was “affordable, safe, with no pollutants”.

“I like high-performance cars,” he told AFP, describing the few Japanese options on the market when he bought in 2016 as small and unattractive.

There are now government incentives for people to go electric, but Ikeda says “charging infrastructure is too weak in Japan”, blaming “heavy regulations”.

Zero-emission targets

With priorities elsewhere, the situation in Japan is increasingly inconsistent.

According to a PwC study, EVs made up 20 percent of new cars sold in China last year, around 15 percent in western Europe and 5.3 percent in the United States.

It’s ironic that EVs has a long history in Japan, with the i-MiEV revealed by Mitsubishi Motors in 2009, and Nissan releasing its Leaf model a year later.

Due to the fact that there was a lack of a nationwide charging network in Japan at the time of the release of the above-mentioned vehicles, the models were considered as impractical and also expensive because of their batteries.

Hybrids were a more attractive option and have proved enduringly popular, making up more than 40 percent of sales in Japan last year.

Government and industry efforts have also been sidetracked by a drive to develop hydrogen-powered vehicles — a sector that has grown much slower than electric.

Britain, several US states and the European Union all want new cars sold to be zero-emission by 2035.

However, Japan’s goal includes hybrids and hydrogen-powered fuel cell vehicles by the same year.

Despite the obstacles, there are some signs of change, spurred in part by more demanding EV targets in overseas markets.

If they cannot “react quickly” to these new demands, “some Japanese carmakers could disappear”, said auto analyst Koji Endo, of SBI Securities.

Has to be EV first

More ambitious targets have been rolled out by Japanese firms, even as foreign automakers try to establish a foothold for their EVs in the country.

Last year, Nissan launched its “Sakura” model — a fully electric car in the mini-sized “kei” category that is popular in Japan. It accounted for a third of the country’s EV sales in 2022.

“Japanese drivers’ daily travel range is shorter,” compared with European or US consumers, Nobuhide Yanagi, Nissan’s chief marketing manager for EVs in Japan, told AFP.

So small cars “could potentially win more share in the EV market, not only for Nissan”.

By 2030, the government of Japan wants to double the number of charging stations from 30,000 to 150,000.

Its embrace remains qualified though, with an official from Japan’s trade ministry warning electric vehicles “are expensive, and resources are limited”.

“Hybrid technology is affordable and offers significant (emission) savings,” Kuniharu Tanabe, a director at the ministry’s auto industry division, told AFP.

When talking about Europe’s EV strategy, he described it as “extreme”, and noted a last-minute carve-out for synthetic fuel vehicles.

Japan’s caution is not entirely unwarranted, particularly given potential shortages of raw materials like lithium, said Christopher Richter, an auto analyst at CLSA.

“If you are all EV, you could be putting your franchise at great risk. That said, it still has to be EV first,” he told AFP.

“Climate change is real, the effects are going to get worse with time, so at some point there will be a demand to have zero emissions.”

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