To use this site, please disable the ad blocking feature and reload the page.
This website uses cookies to collect information about your visit for purposes such as showing you personalized ads and content, and analyzing our website traffic. By clicking “Accept all,” you will allow the use of these cookies.
Users accessing this site from EEA countries and UK are unable to view this site without your consent. We apologize for any inconvenience caused.
There is a growing international trend for countries to establish domestic supply chains for storage batteries, the core component of electric vehicles. It is hoped that Japan also will steadily strengthen its domestic production bases by deepening cooperation between the public and private sectors.
The Economy, Trade and Industry Ministry has decided on a policy to provide subsidies of up to about ¥350 billion to companies such as four auto manufacturers — Toyota Motor Corp., Nissan Motor Co., Subaru Corp. and Mazda Motor Corp. — for their investment plans in EV batteries.
The companies plan to invest a total of about ¥1 trillion by 2028, and subsidies that are equivalent to about one-third of that amount will be provided.
Toyota and Nissan will build separate plants in Fukuoka Prefecture, Subaru will build a plant in Gunma Prefecture, and Mazda in Yamaguchi Prefecture and elsewhere. These measures will increase domestic production capacity by 50% compared to the current level.
A storage battery accounts for about one-third of the price of the EV itself and significantly affects performance and price competitiveness. Stable procurement of storage batteries is essential, and government support is appropriate. The construction of these plants will also help vitalize local economies.
The perspective of economic security should also be emphasized. Chinese manufacturers boast overwhelming price competitiveness for EV batteries due to excessive subsidies from their own government and easy access to rare metals essential for battery production.
China accounted for about 60% of the global share of EV battery production in 2022, while Japan, once the leader, dropped to a little less than 10%.
China has repeatedly exerted economic coercion to pressure other countries with its economic power. Excessive dependence on China for the procurement of key components must be avoided.
Western nations are using massive subsidies to accelerate their moves to strengthen domestic production bases for batteries. It is understandable that Japan, feeling a sense of urgency over currently falling behind these countries, has decided to provide subsidies on an unprecedented scale.
Meanwhile, the competitive environment is changing significantly in Europe. Amid sluggish EV sales in the region, companies have fallen into dire straits due to a large influx of inexpensive Chinese products. For the first time since its founding, Volkswagen AG of Germany is being forced to consider closing domestic factories.
While EVs are expected to grow in the medium- to long-term in order to realize a decarbonized society, some believe that demand will slow down in the near term due to remaining issues regarding user-friendliness, such as their short driving range. It is important for Japan to proceed with its specific investment plans while keeping an eye on sales trends.
In addition, Japan has been promoting research and development of next-generation all-solid-state batteries, which can be recharged in large quantities in a short period of time. If they are successfully put into practical use, it could completely change the competitive environment. The batteries can be expected to be of use for a wide range of purposes, including industrial purposes.
