• Technology

Govt to Subsidize Battery Production Equipment; Manufacturers to be Encouraged to Form Alliances

Yomiuri Shimbun file photo
Prime Minister’s Office

A new subsidy program to support makers producing equipment for the production of storage batteries used in electric vehicles and other devices will be established by the government within this fiscal year, it has been learned.

The government will revise the policies on initiatives for ensuring stable supply under the economic security promotion law and add capital investment in production equipment to the list of expenses eligible for subsidies. Part of the ¥265.8 billion earmarked in the fiscal 2023 supplementary budget will be used for the subsidy program.

More specifically, the subsidy program will cover makers producing equipment used in the assembly and inspection of cells, a core component of storage batteries, and the application of materials used in electrodes. In addition to capital investment, the government will subsidize the development of technologies to help decarbonization and digitalization and enhance production infrastructure.

In Japan, about 90% of production equipment makers are small- and medium-sized companies. While each company has high technological capabilities, they do not have enough money to spare for investment. With the new subsidy program, the government will encourage those makers to strengthen their production infrastructure.

As a condition for the subsidy, the government will require the formation of an alliance by multiple makers. To increase convenience, trading and other companies will be designated as coordinators that serve as contact points, so that battery makers will be able to place bulk orders for various types of production equipment.

The system will also benefit production equipment makers as it will help them cut the time and cost needed to adjust designs and specifications of equipment. In order to prevent the outflow of technologies, the government will require those makers to limit the number of people who have access to key technologies and consider whether they need to take measures regarding technology transfer to foreign countries. It will also require them to improve labor conditions for their engineers, including re-employment.

The storage battery market is dominated by Chinese and South Korean companies and Japan is also lagging behind these countries in the field of battery production equipment. In the future, the full-fledged production of EVs is expected to begin in Japan and automobile makers will likely have to compete for batteries. The government aims to increase annual domestic battery production capacity to 150 gigawatts-hours by 2030, a 600% increase compared to the 2020 level.

If production equipment makers are slow to strengthen their production infrastructure and EV production is impeded because of that, Japanese battery makers will have no choice but to use production equipment from Chinese and South Korean companies, which will pose concerns over technology outflows.

Besides batteries, the government also plans to establish conditions for the grant of subsidies, such as measures to prevent technology outflows, for advanced electronic components, machine tools, industrial robots, airplane parts and other products.