The reason why Japan is “lagging” in the electric car race?

Chinese and Western automakers are dominating the market where Japan was once a pioneer.

Chinese and Western automakers now control 90% of the global electric vehicle market. Meanwhile, according to Nikkei calculations, Japanese companies that were equally influential decades ago are now down to less than 5%.

The big difference in the trajectory of Japan and the rest of the world is due to the success of hybrid models, which are so loved by Japanese automakers.

Global electric vehicle sales reached 6.8 million units between January and November 2022, an increase of 50% from 2021. The share of electric vehicles in total vehicle sales has increased from 6% to ten%.

Chinese electric vehicle makers such as BYD have sold about 2.9 million units in 2022. BYD is also stepping up operations outside of China, looking to other countries in Asia. American electric vehicle makers, led by Tesla, have sold 2.1 million units. European companies, such as Volkswagen and Renault, have sold about 1.2 million electric vehicles.

Losing the battle in the very field that once pioneered, this is the reason why Japan "falls behind" in the electric car raceLosing the battle in the very field that once pioneered, this is the reason why Japan "falls behind" in the electric car race

Meanwhile, Japanese automakers such as Toyota, Honda and Nissan have only sold about 200,000 electric vehicles this year, or 2%-3% of the market, and are likely to end the year with sales less than 5%.

In 2010, the overall picture of electric cars was quite the opposite. At that time, global sales of electric vehicles were only a few thousand or several tens of thousands of units per year. Japan then controlled about 70% to 90% of the market.

In 2009, Mitsubishi Motors introduced the i-MiEV, which was billed as the world’s first mass-produced electric vehicle. Nissan followed with the Leaf launched in 2010.

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So why did China and the US later overwhelm Japan?

The answer is that other countries around the world are starting to feel the value of electric vehicles. This is a vehicle with an engine that does not emit carbon dioxide (CO2), contributing to reducing greenhouse gases. Electric vehicles have fewer parts than conventional gas cars, making it easier for later manufacturers like Tesla and BYD to enter the market.

The second reason is the change of the hybrid car market. By 2015, hybrid vehicles using an internal combustion engine and an electric motor in parallel were considered a viable means of reducing emissions. But Volkswagen’s emissions cheating scandal that year quickly pushed automakers toward electric vehicles.

Non-Japanese automakers also avoid competition in the hybrid vehicle market, where the likes of Toyota are leading. With that, European governments support the promotion of electric vehicles and introduce rules to completely phase out internal combustion engines, including hybrids, by 2030.

Meanwhile, the Japanese government is establishing tax incentives for low-emission vehicles, including hybrids, electric vehicles and fuel cell vehicles.

Japanese manufacturers see hybrids as a more effective strategy than electric vehicles to sell low-emission vehicles, in part due to the high cost of electric vehicle batteries. With Japan adopting renewable energy slower than Europe, the idea of ​​charging electric vehicle batteries from coal-fired power plants will hardly be seen as helping to reduce CO2 emissions.

Japan accounts for only about 5% of the global auto market. If the country’s automakers are too focused on hybrids and domestic sales, they risk falling behind global trends.

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Japanese electric vehicle companies are now turning to electric vehicles belatedly. Honda is planning to phase out gasoline-powered cars entirely by 2040.

Electric vehicles account for about 10% of global vehicle sales. This is a tenfold increase from less than 1% around 2010, when Japanese companies dominated the market.

Source Nikkei Asia

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