Seeing the influx of foreign electric vehicles, should Japanese automakers be nervous?

Japan used to be skeptical of electric vehicles, believing that hydrogen fuel was the future, but reality has made them more and more sober. Looking at today's Japanese auto market, electric vehicles account for only 1% of sales, far behind China and Europe.

But Japan is catching up. In 2021, the number of new registrations of imported electric vehicles in Japan almost doubled to 8610. The numbers are not high, but this subtle change still shines brightly in the Japanese auto market, which has long since stopped growing.

Global oil and electricity abandonment has become a major trend, and Japan has to change its course

Japan has a high per capita income and an incomparable passion for high-end European cars such as Mercedes-Benz. Musk is bullish on the Japanese market, predicting in 2010 that Japan would become Tesla's second-largest market after the United States.

Nissan began selling Leaf electric vehicles more than 10 years ago, but today Japan is still afraid to bet on electric vehicles in its entirety. Japanese automakers and the government have pushed for hybrids, and Toyota has been the driving force behind hybrids for the past 25 years.

Now the situation has changed, because the international environment has changed. General Motors and Volkswagen have announced that they will abandon fuel vehicles, and abandoning fuel and electricity has become a major trend, and Toyota, Nissan, and Honda have all formulated electric vehicle strategies;

The Japanese government is also adjusting, pledging to reach carbon neutrality by 2050, cutting carbon emissions to half the level it would have in 2013 by 2030 and banning the sale of fuel vehicles around 2035. In an effort to spur eviction sales, the Japanese government raised the subsidy for electric vehicles to 800,000 yen ($7,000) per vehicle last November. The news has encouraged overseas automakers.

Matthias Shapers, president of Volkswagen Japan, said: "The transition to zero-emission electric vehicles has not yet happened, but if it does happen, the process will accelerate. He stressed that Tesla motors are selling well in Taiwan Province.

In Japan, young people and wealthy people seem to like Tesla cars, and they live in urban areas with charging piles. Seiji Sugiura, an analyst at Tokyo-based Tokai Consulting, believes that Tesla's stock price far exceeds that of Toyota, which has led to a rapid increase in Tesla's brand awareness in Japan, where Tesla has become a status symbol.

IHS Markit estimates that Tesla vehicles sold more than 5,200 in Japan last year, compared to about 1,900 in 2020; this year's valuation sales will be lower because consumers may wait for the new Model Y, which is expected to reach the Japanese market by the end of the year.

Because there are discounts, maybe more people will go to Tesla. In February last year, Tesla Japan cut the price of the long-endurance version of the Model 3 by 24%, and the Chinese market also lowered the price. Tu Le, an analyst at Sino Auto, believes that soon Tesla's Berlin plant will be put into production, and more Chinese-made Tesla cars will pour into Japan, South Korea, and India, and the price of Japanese Tesla cars will be further reduced.

It will be difficult for foreign electric vehicles to enter Japan, but the opportunity is still there

Is it really easy for foreign electric cars to enter Japan? not necessarily. Carnorama analyst Takeshi Miyao said: "The competition will be fierce. Japanese cars are strong globally and stronger on Japan. It is difficult for foreign auto dealers to enter. He also believes that Toyota Bz electric vehicles will become a strong competitor to Tesla.

To transition to electric vehicles, Toyota is ready to invest $35 billion. Nissan Renault-Mitsubishi is also poised to invest $26 billion over five years to launch 35 new battery cars by the end of the decade.

When competing with foreign electric vehicles, Japanese automakers have another advantage: They control more charging stations. Nissan already has its own charging network, and it will continue to expand. About 2025, Toyota will let Toyota dealers in Japan be equipped with charging piles.

Tesla has its own charging piles in the metropolitan area, but it's unclear how much it will build in Japan this year. Volkswagen Japan will also expand its charging network in Japan, deploying 90-150KW charging piles, which will be deployed in about 200 locations by the end of the year, and the cost of each charging station is about 25 million yen (about 1.37 million yuan). Stellantis NV is also preparing to add charging stations in Japan, and it hopes that the Japanese government will support it more. Pontus Haggstrom, CEO of Stellantis Japan, said: "Infrastructure is not a manufacturer's business, it is a government's business. ”

About 5 million cars are sold in Japan every year, 90% of which come from toyota, Honda, Nissan and other domestic companies. Total domestic vehicle sales in Japan decreased by 3.2% year-on-year in 2021, but foreign auto sales increased by 1.7%.

About half of the cars imported from Japan are expected to be Tesla, and Volkswagen also sees an opportunity and is entering. By 2025, Volkswagen expects about a third of the cars Audi sells in Japan (10,000) to be electric.

Hyundai exited Japan twelve years ago due to poor sales, and this year it is ready to return. Starting in May, Japanese people will be able to buy hyundai Nexo hydrogen-fueled SUVs and Ioniq 5 electric vehicles.

BMW has made its way into Japan, where it launches a four-door i4 sedan that costs $65,000-$94,000 and will be delivered in March.

Popularization is more difficult, and hydrogen fuel vehicles cannot catch up with electric vehicles

Patrick Pl tz, a researcher at the Fraunhofer Institute for Systems and Innovation Research ISI in Germany, recently posted in Nature that hydrogen fuel cell vehicles cannot keep up with the pace of electric vehicles, not only passenger cars, but also commercial trucks.

Most automakers bet on BEVs (battery electric vehicles), but Toyota Hyundai General Motors is reluctant to give up FCEVs (hydrogen fuel cell vehicles). Many FCEV projects have failed, investing countless sums of money but no one cares, toyota mirai, hyundai Nexo are good examples.

Why? There are many reasons, such as the low efficiency of FCEVs, which is only one-third of that of battery electric vehicles; infrastructure is difficult to promote. Of course, BEVs also face infrastructure problems, but battery EV charging facilities are built on top of the existing grid, which is an advantage. Also, every car is the equivalent of a battery.

The biggest challenge for BEV is to build more fast charging stations, which is not low, but hydrogen cars are more difficult, and it needs more support, such as producing hydrogen, transporting hydrogen, storing hydrogen, and also needing distribution facilities. At night, BEVs can be charged at home, but hydrogen cars can't.

Some people think that hydrogen fuel can be used in commercial trucks, but Patrick Pl tz does not agree. "With advances in batteries, charging technology and lower costs, hydrogen fuel cell vehicles will soon become redundant in road transport," he said. ”

That's the embarrassment of Japanese automakers, who still don't see any hope of popularization. Toyota has hurried to launch an electric car, and its first mass-produced electric car will be launched at the end of the year, but this car will not be sold in Japan for the time being, why? The official narrative is to focus first on markets where electric vehicles are in greater demand. Is this really the case? Not necessarily.