Automakers in high gear to boost EV sales

Reuters file photo
Toyota Motor Corp.’s cars are seen at a briefing on the company’s strategies on battery EVs in Tokyo on Dec. 14, 2021.

TOKYO (Jiji Press) — Japanese automakers’ drive to tap the potentially lucrative electric vehicle market has swung into full gear as they are eager not to miss out on the global shift to electrification.

Along with storage battery development, Japanese companies are exercising ingenuity in crafting sales strategies.

But with no clear outlook on how much the Japanese market will expand after falling far behind the United States, European and Chinese markets, they are struggling to find a path to success in “an era where no one knows the right answer,” as one senior Toyota Motor Corp. official puts it.

In May, Japanese industry leader Toyota released the bZ4X electric SUV, its first mass-produced EV model, in Japan.

The bZ4X is available only under a subscription system, reflecting Toyota’s aim of alleviating drivers’ concerns, primarily over battery degradation, by setting fixed monthly fees including maintenance expenses.

Terminal values for EVs, which indicate their future value, tend to be assessed relatively low, probably due to stringent appraisals to reflect the expected degradation of batteries.

The lower terminal values mean a need for more loans to finance EV purchases as well as adverse effects on trade-in prices for the vehicles.

The factor has been singled out as a psychological impediment to new EV purchases and thus as a roadblock to wider use of EVs in Japan.

“We should take on risks regarding trade-in prices, a major source of worry for drivers, and battery degradation,” Shinya Kotera, president of Kinto Corp., which operates subscription services for Toyota models, said.

The new Fiat-brand EV released in April by Stellantis Japan Ltd., the Japanese arm of U.S.-European automaker Stellantis NV, is also limited to lease contracts, including subscriptions, in Japan.

Setting EV prices is another major challenge for Japanese automakers.

Increasing the mileage per charge, winning attention from drivers in Japan, would push up storage battery costs, conflicting with any attempt to lower EV prices to put the vehicles in wider use.

Torn between the incompatible demands, in the early phase of EV market development in Japan, automakers chose to focus on luxury models, introducing high-priced, high-margin models for popular SUVs and billing them as their flagship EVs.

The reference price for Toyota’s bZ4X starts at ¥6 million, while the lowest price for Subaru Corp.’s Solterra, which was co-developed with Toyota and shares a chassis with the bZ4X, is ¥5.94 million. Both are priced higher than similar SUV models from other companies.

Nissan Motor Co. released the Ariya, an electric SUV, in May with a price range from ¥5.39 million. The model features a high-quality interior and is equipped with the latest driving assistance technologies, aiming to attract customers seeking an upscale touch.

South Korea’s Hyundai Motor Co. started accepting orders for the Ioniq 5 electric SUV in Japan in May. With the minimum price set at ¥4.79 million, the Ioniq 5 is available only via the company’s online channel.

The automotive industry is seen to be in a once-in-a-century period of transformation due to the spread of auto sharing and young people’s lack of interest in owning or driving vehicles.

Toyota, which decided to use the subscription channel, started out by bracing for trial and error. “We never know how the [new] business will develop until after we take a shot,” Executive Vice President Masahiko Maeda said.