Japan’s electric vehicle market may depend on success of commercial EVs

The Yomiuri Shimbun

15:25 JST, August 30, 2021

Electric vehicles could play a key role in the move toward a decarbonized society, but their presence in the market is far from commonplace.

While their driving range is limited, this restriction is increasingly seen as acceptable by home delivery services that rely on small trucks and light vans to carry out deliveries in fixed areas.

Thus, logistics companies, which have been struggling with their measures to combat global warming, have been paying more attention to electric vehicles, with commercial EVs boosting the market ahead of passenger EVs being widely accepted by consumers.

Start-up your engines

HW Electro, a Tokyo start-up specializing in EVs, launched the small EV truck Elemo in July.

The start-up has two models. On a full charge, one model has a shorter driving range of 120 kilometers and the other has a longer range of 200 kilometers. It takes around six hours to charge the first model, and eight hours to charge the second. The shorter-range version sells for around ¥2.1 million.

The vehicle is designed to be more practical than standard light trucks. As the EV has more cargo capacity and is smaller in width, it can, for example, cruise more deftly through narrow urban road networks.

The cars are sold online to help reduce costs and the company aims to sell 500 units this year. It is said that the vehicle has already attracted the attention of major companies in the logistics and retail industries.

The model was developed by a U.S. company and produced in China, but HW Electro plans to develop and produce a made-in-Japan version by 2023.

“The new model will be cheaper,” said HW Electro President Hsiao Weicheng, who is from Taiwan. “In the future, we want to sell our vehicles at major electronics and appliance stores, too.”

It’s not only start-ups that have been electrifying their lineups.

Among major auto manufacturers, Hino Motors, Ltd. will launch the Hino Dutro Z EV, a compact EV truck, in early summer 2022. It will be smaller than most gasoline-powered vehicles and is aimed at being suitable for a wide range of uses.

Mitsubishi Motors Corp., which in 2011 launched the Minicab-MiEV, a light commercial EV, plans to launch an improved model at a reduced price within a few years.

Sagawa Express Co. plans to use EVs in its delivery services by jointly developing a new model with a start-up after September next year.

Surging last-mile demand

In the transportation industry, the “last mile” refers to the final leg of the delivery of goods, from a local distribution station to a recipient.

The Japan Association for Logistics and Transport pointed out that EVs can be used for such last-mile deliveries if they have a 50-kilometer driving range when fully charged.

In response, various companies have started to focus on developing EVs for commercial use with limited battery capacity and pricing them at around ¥2 million.

On the consumer side, demand in delivery services has ballooned in tandem with the proliferation of online shopping.

Yano Research Institute Ltd. estimates that the market related to last-mile delivery services will expand by about 50% over the next four years to ¥2.9 trillion in fiscal 2023.

The movement toward decarbonized societies, which has become global, is expected to be a factor for the expansion of the EV market.

But according to the Japan Automobile Dealers Association, EVs accounted for only 0.6% of new passenger vehicles sold in Japan in 2020, excluding mini vehicles. The low percentage is believed to stem not only from the widely held consumer belief that EVs are relatively expensive with limited driving ranges, but also because of a lack of infrastructure, such as fast charging stations.

For EVs to become widespread, success in the commercial vehicle market is seen as a key factor.