More and more consumers in Japan are beginning to join the ranks of the few but growing electric vehicle owners in Japan, although electric vehicles account for only 1% of total car sales, far behind China and some European countries, but electric vehicles in Japan finally have the momentum to seize the traditional fuel vehicle market.
In the whole of 2021, the number of new registrations of imported electric vehicles in Japan nearly tripled to 8610, which is a small but significant shift in a country where overall car sales are almost stagnant.
With high per capita incomes and a passion for high-end European cars such as Mercedes-Benz, Tesla (TSLA. US) CEO Elon Musk initially thought That Japan would be an important market for Tesla, predicting as early as 2010 that the Asian country would become Tesla's second-largest market after the United States.
Japan is finally "embracing" electrification
But while Nissan pioneered the launch of the affordable Electric Leaf more than a decade ago, Japan is still wary of overselling its pure electric vehicles. Instead, Japan's national efforts to explore new technologies for hydrogen energy, and Japanese automakers and governments are more inclined to promote hybrid vehicles, believing it to be a more economical model, Toyota Motor (TM. US) pioneered Prius about 25 years ago.
However, it turns out that Japan has once again "misproached" the technology tree, and under the pressure of the international community to reduce emissions, it seems that there is now a big turnaround. Toyota Motor, Nissan and Honda Motor (HMC. US) has launched new electric vehicle strategies, from General Motors (GM. US) to Volkswagen (VWAGY. Foreign traditional auto giants such as the US) have pledged to abandon internal combustion engine cars altogether in the near future.
The Japanese government's pledge to be carbon neutral by 2050 also appears to have shifted its earlier focus on protecting the country's auto industry. Japan now aims to cut emissions by nearly half at 2013 levels by 2030 and wants to ban the sale of gasoline-fueled cars by the middle of the decade after 2030.
A boon for electric vehicles
Meanwhile, the Japanese government is making electric vehicles more affordable for consumers, doubling the subsidy to a maximum of 800,000 yen (about $7,000) in November.
This is good news for foreign EV makers, who have long ceded the market to Toyota Prius and Nissan Leaf. Matthias Shapers, president of Volkswagen Japan, said: "The transition to zero-emission electric vehicles has not yet been realized, but once it is, we will see it move forward rapidly."
Some analysts say Tesla cars are particularly popular among young and wealthy people in Japan, who live in urban areas where electric vehicle charging piles have become widespread, and they also agree with Musk's maverick philosophy. Globally, Tesla delivered more than 936,000 vehicles last year, up 87 percent from the previous year.
Seiji Sugiura, an analyst at Tokyo Tokai Research, said: "Tesla's stock price increase has boosted Tesla's brand recognition in Japan. He also said Tesla has become a status symbol.
IHS Markit expects Tesla to sell more than 5,200 units in Japan last year, up from about 1,900 in 2020 and about 174 percent year-on-year, though the company also predicts that Tesla sales in Japan will stagnate briefly this year as potential buyers wait for the new Model Y (which is expected to be available around the end of the year).
Plus, attractive discounts can also make Tesla affordable for more people. In February last year, Tesla Japan cut the price of its remote model 3 by 24 percent to about 5 million yen, comparable to the price reduction in the Chinese market.
The opposite: The competition is fierce
However, some analysts warn that Tesla will struggle to expand in Japan in any meaningful way, especially as domestic automakers pour more resources into electric vehicles. Although Tesla's fan base includes more and more young, tech-savvy motorists, Tesla's brand recognition is still not high, and its direct-to-consumer business model has also made it impossible for most Japanese consumers to get used to in the short term.
"It's going to be a fierce battle," said Takeshi Miyao, an analyst at car consultancy Carnorama. "Japanese automakers are strong all over the world, but they're stronger at home. It's a very tough market for foreign automakers. ”
Miyao expects Tesla to compete particularly fiercely with the Toyota bZ series. The bZ series is a line of all-electric SUVs launched last year, and Toyota is planning to spend $35 billion to accelerate the transition to electric vehicles.
Nissan and its partners Renault and Mitsubishi Motors plan to invest a combined of about 23 billion euros (about $26 billion) over the next five years to launch 35 new battery-powered vehicles by 2030.
Domestic Automakers will also gain the upper hand when it comes to providing charging stations, thanks to their existing dealer network throughout the country, including rural areas. Nissan already has a network of charging stations and plans to build more as part of a global project worth 20 billion yen. Toyota said that by around 2025, it will equip all dealers nationwide with electric vehicle charging stations.
At the same time, Tesla's charging piles are concentrated in metropolitan areas. The company did not say how many charging piles it will expand in Japan this year, but said it is currently looking for a charging pile project deployment manager.
Volkswagen Japan said it will build Japan's largest fast-charging network by the end of this year, installing 90-150 kilowatts of fast-charging equipment at about 200 locations, with installation costs as high as 25 million yen.
Stellantis NV(STLA. US) has also begun negotiations with energy suppliers to expand its charging network. Stellantis Japan CEO Pontus Haggstrom said he would like to see the Japanese government play a more active role. "In terms of infrastructure, it's not the manufacturer's job, it's what the government needs to try to do." He said.