Japan Govt to Promote Domestic Used EV Market; Aims to Retain Critical Minerals Found in Batteries

The Yomiuri Shimbun

14:51 JST, September 3, 2024

The government plans to start promoting the used electric vehicles (EVs) market to build a system for domestically recycling batteries used in EVs due to concerns about the outflow of critical minerals from Japan, it has been learned.

Japan procures critical minerals needed for battery production from China and elsewhere. However, 80% of used EVs are exported — which means that the minerals are flowing back out of the country.

The government plans to enhance economic security by introducing a service that guarantees the performance of used batteries, thereby promoting the spread of EVs and the domestic circulation of used EVs and their batteries, according to sources.

With the involvement of the private sector, the Economy, Trade and Industry Ministry will begin to support the development of a market for used EVs and the secondary use of batteries.

In particular, the public and private sectors will work together to create the service guaranteeing EV battery quality.

Under that service, non-life insurance companies will introduce in September a new insurance policy for EVs that guarantees the performance of the vehicle after battery manufacturers evaluate the condition of the batteries. If the batteries deteriorate during the warranty period, the policy will cover replacement batteries or even replacing the whole vehicle with another of a similar model. The insurance, with premiums set at around ¥20,000-¥30,000 per unit, is expected to be sold to used car dealers.

The government also envisions that batteries that are no longer usable in EVs due to deteriorated performance can be transferred for use in golf carts and other small vehicles.

Japan imports 90% of the graphite it needs to make batteries from China. However, the supply of graphite has become unstable since China introduced export restrictions last December. The export restrictions are believed to be a countermeasure against restrictions by Japan, the United States and Europe on advanced semiconductor exports to China.

Since it is difficult to determine the deterioration status of a battery, the prices of used EVs tend to fall more quickly compared to hybrid and other vehicles, and the majority of used EVs are sold overseas. This is one of the reasons why new EVs are not being sold more widely.

For the demonstration project, the ministry has selected recipients of support, including Prime Planet Energy & Solutions Inc., a joint venture manufacturer created by Toyota Motor Corp. and Panasonic Holdings Corp. It has also selected Yamaha Motor Co. and a subsidiary of SOMPO Holdings Inc. The government plans to subsidize up to two-thirds of the cost of the feasibility trial.

The government has set a target for all new passenger car sales to be electrified vehicles, including hybrids, by 2035. The number of batteries in circulation is thus expected to increase.

The Japan Research Institute Ltd. estimates that, if a circular model for all

used EV batteries could be created in Japan, the related market would be worth about ¥600 billion in 2030 and about ¥8 trillion by 2050.