The evolving electric vehicle market in Japan
For the domestic EV market, 2017 saw a record year of new sales, fueled by the launch of the new Toyota Prius PHV selling a record of 25,000 units. The October introduction of the new Nissan Leaf is expected to keep the momentum going, with a sales target in 2018 that is said to be in the range of 30-45k units just for Japan.
The number of EVs sold in Japan grew by CAGR 2.7% during the period from 2012 to 2016 and this trend will increase to a CAGR 5.9% in the forecast period from 2017 to 2021.
Along with the increasing number of EV sales, the charging infrastructure has also been growing. The development of the charging infrastructure is essential to encourage electric vehicle take-up and fight range anxiety that afflicts many potential plug-in drivers. In 2016 it was estimated that there were more than 40,000 charging places nationwide where electric car owners could recharge their vehicles, however this number also includes a large number of private chargers. The number of public charging stations is estimated at around 22,500.
Electric Vehicle Supercars
While the mass adoption of EVs is slowly picking up speed, the introduction of electric supercars has been accompanied by a lot of hype and been able to grab consumer attention. With the introduction of new supercar models such as the Tesla Model S, sales of electric supercars surged to 574 units in 2015.
The number of EV supercars sold in Japan grew by CAGR 4.7% during the period from 2012 to 2016 and this trend will accelerate to CAGR 32.5% in the forecast period from 2017 to 2021.
Supercar is a general term referring to luxury and high-performance passenger vehicles, other common terms used include high-performance sports cars or race cars. For the purpose of this research electric supercar is defined as a passenger vehicle that exceeds 300 hp, generally reaching a level of 500 hp, and a minimum price of US$90,000.
Hypercar and megacar are new terms in the industry, referring to electric cars which even higher performance than supercars, having more than 700 hp. Compared to a hypercar, the megacar is a vehicle that is even more niche with 1500 hp.
With the technological development in the industry the level of horsepower of electric supercars has continually increased. Older generation electric supercars launched in 2014 reached a level of horsepower around 300 hp. In contrast, electrical supercars today often have horsepower in the range of 500 to 700 hp.
It is expected that the continuous introduction of new EV models by existing automakers will also positively impact the demand for electric supercars, supporting the growth of the number of electric supercars sold in Japan. Specifically, Porsche Japan KK is planning to launch new EV models but also extend its model lineup to PHEV by 2020 in order to achieve their goal of raise their EV sales volume in Japan.
Another interesting segment which receives much less attention is the electric bus segment.
The number of electric buses sold in Japan increased from 407 in 2012 to 428 in 2016, representing a CAGR of 1.3%.
The electric bus market in Japan is expected to rebound from the stagnant trend driven by government policies and newly introduced models. During the forecast period, the number of electric buses sold in Japan is projected to increase significantly going from 618 in 2017 to 1,197 in 2021, a CAGR of 18.0%.
Government support and technological advances have enabled Japan to be an early adopter of electric buses. Continued government support through favorable policies will be one of the key drivers of the stable growth of electric bus sales in Japan. In late 2015, the Japanese Ministry of Land, Infrastructure, Transport and Tourism announced a subsidy program aimed at encouraging public transportation businesses to adopt electric buses, trucks and taxis. The subsidy is covering up to 50% of the purchase of a new electric bus and charging facilities.
Japanese EV manufacturers have also actively engaged in developing new electric bus models. For instance, Hino is developing medium-duty plug-in hybrid electric bus. These newly developed models are expected to be more advanced and can fulfill different customer needs.
Trends, Policies and Regulations
The primary focus of Japan’s government policies on EVs is to support the revitalization of the economy by stimulating consumer demand. Government investment in the EV ecosystem focuses on supporting the development of next generation vehicles be Japanese car manufacturers.
Japan’s government considers the automotive industry as a key pillar for influencing the whole economy in the near future; therefore, various investments have been made to domestic automotive manufacturers supporting them to develop global leadership positions in the next generation vehicle ecosystem.
The Ministry of Economy, Trade and Industry announced the ‘Next Generation Vehicle Strategy 2010’ and ‘Japan Revitalization Strategy’ in 2013 to stimulate consumer demand toward new generation vehicles including EVs. According to the government plan, the government will invest in establishing up to 2,000,000 charging stations and 5,000 quick charging stations nationwide by 2020. Besides government investment in the charging infrastructures, Toyota, Honda, Nissan, and Mitsubishi have also been working together to spread the development of EV charging stations. Four Japanese automakers jointly established a new company, Nippon Charge Service, in 2014 to promote the installation of electric charging systems nationwide.
Government subsidies for EVs began in 2009 under the Green Vehicle Purchasing Promotion Measures, which aimed to further the reduction of Greenhouse Gas emission in Japan. Comprising of two components—the replacement program and the non-replacement program—the Measure worked to remove fuel inefficient vehicles from the road. Both programs offer subsidies up to US$2,500 to car owners and new car buyers purchasing vehicles that have fuel efficiency of 15 percent more than the 2010 Japan Fuel Efficiency Standard.
With the race heating up for global EV leadership, Toyota, Mazda and Denso announced in September 2017 that they will form a joint-venture with the focus to develop the architecture and components of electric cars for use in a wide range of segments, from mini vehicles and SUVs to light trucks.
Finally, what is seen as a very significant development, Toyota and Panasonic announced in December 2017, that they would co-develop batteries for electric vehicles and that those batteries would power up to ten Toyota EV models globally by the early 2020s. This new announcement shows a further strengthening of the relationship between Toyota and Panasonic, as Panasonic already produces batteries for Toyota’s petrol-electric and plug-in hybrid vehicles such as the Prius.