Japanese automakers are picking up speed toward the era of EVs this year

By Jeff Lee 2023-04-07

Japanese hybrid vehicles have been highly recommended in various markets worldwide for many years. With the global consensus on vehicle emissions regulations being net zero by 2035, Japanese automakers have been hammering away at fuel cell electric vehicle technology. However, when the world's traditional automakers saw the rise of Tesla around 2016 and smelled the "zero carbon emissions" trend, EVs became a common option for all automakers (except Japanese ones). Especially when China's own brands mushroomed in 2020, the global auto market experienced a radical change. It has dawned on Japanese automakers that the moment to decide on the general direction has swept in. This year could be a key year.

In the past few years, Japanese traditional automakers have devoted most powertrain R&D resources to hybrids and hydrogen fuel cells, without paying enough attention to the development of BEVs and advanced autonomous driving (L2+ and L4/L5). In a short span of two to three years after 2020, both Chinese independent brands and Korean automakers clearly overtook Japanese automakers in these key technologies for future automobiles. In other words, the advantages of manufacturing quality, excellent price-performance ratio, and low cost of use (fuel consumption, warranty costs, etc.), with which Japan has proudly dominated the global auto market for the past few decades, are vanishing because the era of BEVs has arrived overnight. The advantages of EVs are winning the game. Charging an EV is cheaper than filling up a gas tank. EVs are offered more tax incentives than gasoline vehicles. EVs require little regular maintenance, and their prices are trending downward, not to mention the characteristics of superior acceleration and maneuverability as well as low noise. China, the world's largest single market, has seen dramatic changes in the auto environment in the last two years. All international joint ventures (except Tesla) are losing ground in sales because of the failure to introduce competitive EV models in time. Even the ever-popular Japanese brands are no exception. The fact that Toyota, the world's top auto company, has recently replaced its president is evidence that the 10-year R&D strategy the company launched two years ago, even after earmarking half of its resources for the development of EV models, still failed to gain enough internal confidence in the timetable and the proportion of investment for the company to agree that the strategy would enable the company to keep its global market share goals alive. As a result, Japanese automakers and even government policies seem to be making an all-out effort to shift to the development of EVs and self-driving technology starting this year. Japan's automotive industry has always been unrivaled in the world, so although it is a few years late in kicking off, the subsequent momentum is not be underrated.

  • The regulations on the installation of fast-charging facilities have been relaxed, leading to a significant drop in construction costs. The charging ecosystem is bound to get much user- friendlier at a rapid pace.
  • The use of L4 fully self-driving vehicles on open roads will be legalized by the end of this year.
  • Auto giants are fully committed to developing a new generation of EV platforms, no longer wavering between hybrids and fuel cell electric vehicles.
  • "Conversion of gasoline vehicles to electric vehicles" is another option for short-term technology transition, in the hope of neutralizing sales pressure of EVs from other countries.
  • The shortage of chips is expected to ease in the second half of this year. This will benefit the production capacity of EVs, where demand for chips is high.
  • After a three-year hiatus due to the pandemic, the Tokyo Motor Show will resume this October as the Japan Mobility Show (formerly known as the Japan All-Industry Show), with exhibitors from auto startups and ICT-related industries. It is believed that the show will create a new wave of new energy vehicles in Japan.
  • Open up and start to cooperate with Chinese and American automakers on new EV technologies. Japanese automakers are evidently in a disadvantageous position in terms of autonomous driving, intelligent cockpits, and the progress of the new E/E architecture for EV control. It is time they drew on their own strengths in automotive infrastructure and technology while cooperating with their Chinese and American counterparts to complement each other, so that they can catch up in the game faster.

EV sales only accounted for 1.7% of the Japanese domestic market last year, and globally, the market share of Japanese EVs was as low as 1%. I believe that as Japan's domestic car market switches gears and starts to move toward the era of EVs this year, Japanese automakers will step on the accelerator for the research and development of electrification and intelligentization, getting ready to set foot in the global market of new energy vehicles.