EV in Japan—Tesla Inc.’s self-driving car was the one thing that made 36-year-old Tokyo entrepreneur, Tatsuya Arai, want to buy one. When he moved from Tokyo’s busy Shibuya district to a more tranquil waterfront region, the Model 3’s sleek design and sophisticated dashboard appeared like a good answer.
In his words, “It was like a new piece of technology.” Arai became one of Japan’s growing number of electric vehicle drivers. Even though EVs make up just 1% of total vehicle sales, they’re gradually catching on in Europe and the US. New registrations of imported electric vehicles nearly tripled to 8,610 in 2021, a tiny but notable increase in a country where overall automobile sales have halted.
Tesla CEO Elon Musk projected back in 2010 that Japan would be Tesla’s second-largest market after the United States because of the country’s high per capita income and fondness for high-end European cars such as Mercedes-Benz.
Even after Nissan Motor Co. led the way for inexpensive EVs with the Leaf over a decade ago, the country has remained hesitant of banking too heavily on fully electric automobiles. Hybrids, which Toyota Motor Corp. pioneered with the Prius roughly 25 years ago, have been promoted by Japan’s automakers and government as a more inexpensive vehicles.
As a result of international pressure, there appears to be a shift in strategy. New electric vehicle strategies have been announced by Toyota, Nissan, Honda, and Honda Motor Co. in the wake of global automakers like General Motors Co. and Volkswagen AG pledging to phase out gasoline-powered vehicles over the next few years.
Aside from its pledge to be carbon neutral by 2050, the Japanese government appears to have switched away from protecting the country’s domestic automobile industry. A new goal has been set for 2030 to roughly halve emissions from 2013 levels and eliminate the sale of gas-powered vehicles by the middle of the century.
Meanwhile, it’s lowering the price of EVs for the general public by increasing subsidies in November to a maximum of 800,000 yen ($7,000).
This is encouraging for international EV manufacturers, who have long given up the market to Toyota’s Prius hybrids and Nissan’s Leaf, the first mass-market EV.
Tesla cars are already selling well in nearby Taiwan, where Tesla’s suppliers are thriving. According to Matthias Shapers, president of Volkswagen Japan, the change to zero-emission EV cars has yet to occur.
According to analysts, it’s no secret that young and rich Japanese people like Tesla automobiles since they reside in cities with easy access to electric vehicle charging stations and admire Musk’s unapologetic approach. Despite a global semiconductor shortage that has pushed automakers to slash production, Tesla delivered more than 936,000 cars worldwide last year.
As Tokyo Tokai Research analyst Seiji Sugiura pointed out, “the fact that Tesla’s share price beat Toyota was crucial” in improving the company’s brand recognition in Japan.
According to IHS Markit, more than 5,200 cars were purchased in Japan last year, an increase of approximately 1,900 vehicles over the previous year. However, the company anticipates a slight stop this year as potential customers wait for the new Model Y, which will be available in Japan by year-end.
Discounts could also make Teslas more accessible to a broader demographic. As in China, Tesla Japan slashed the long-range Model 3’s price by 24 percent to roughly 5 million yen in February 2017.
It is predicted that Tesla will soon announce production at its Gigafactory in Berlin, its first plant in Europe, and another in Austin, Texas.
It’s now possible that a large number of Tesla cars manufactured in China will be sent to Japan, South Korea, and India in 2022, according to the head of the Sino Auto Insight company, Tu Le, who also expects additional price drops in Japan.
However, many believe that Tesla will have difficulty expanding, especially when domestic automakers devote more resources to electric vehicles. While Tesla has a burgeoning fan base of young, tech-savvy drivers, the company still faces issues with poor brand awareness and a direct-to-consumer business strategy that baffles many customers used to receiving white-glove treatment from retailers.
Takeshi Miyao, an automobile consultancy analyst, predicted a close race. “Japanese automakers are victorious worldwide, but they’re much more potent at home. For foreign automakers, the market is demanding.
According to Miyao, Toyota’s series of electric-only sport utility vehicles, which were revealed last year, will be a particularly formidable competitor. Toyota is planning a $35 billion investment in electric cars.
Increasing Fondness for EV in Japan
For a total investment of $26 billion over five years, Nissan and its alliance partners Renault SA and Mitsubishi Motors Corp. plan to introduce 35 new battery-powered vehicles by the end of the decade. Domestic carmakers will have an advantage in terms of charging stations because of their extensive network of dealerships around the country, including in remote areas. More charging stations will be built as part of Nissan’s 20 billion yen global program. Toyota has stated that all of its dealerships across the country will have EV chargers installed by 2025.
Tesla’s charging stations, on the other hand, are focused in major cities. Although it won’t reveal how many charging stations it plans to create in Japan this year, according to its website, the company is now seeking a project manager to deploy charging stations in Japan.
By the end of this year, Volkswagen Japan plans to have 200 quick-charging stations equipped with 90-150 kilowatt rapid chargers, making it the country’s largest fast charging network. Each one can cost up to 25 million yen to install.
Stellaris NV has also begun negotiating with energy sources to develop its charging station network. There has to be more government involvement in the development of Stellantis Japan, the company’s CEO, Pontus Haggstrom, stated. “Infrastructure is not something that manufacturers should be concerned about.” The government must focus on this, he said.
Tesla enthusiast Arai is happy with the Model 3’s 340-mile driving range. Even though he wishes there were more charging stations along roads, the difficulty is outweighed by features like over-the-air software upgrades and the ability to unlock the door with his smartphone.
“I’m seeing more and more Tesla owners every day,” he noted.