Once a niche, Tesla took advantage of Japan ‘s late adoption of EV Car Industry


Tatsuya Arai, a 36-year-old entrepreneur in Tokyo, has never seen the allure of owning a car until watching a YouTube video starring Tesla Inc. The Model 3, with its sleek exterior and innovative dashboard, seemed like the perfect solution, as it moved from the bustling Shibuya district of the city to a quieter coastal area and needed a way to get around.

“It was like buying a gadget,” he said.

Arai has joined a small but growing number of electric vehicle owners in Japan. While electric cars account for only 1% of total car sales, well behind China and parts of Europe, they are finally catching up. In 2021, new registrations of imported electric cars almost tripled to 8,610, a small but remarkable change in a country where overall car sales have stopped.

With its high per capita income and enthusiasm for high-end European cars like Mercedes-Benz, Japan initially seemed natural to Tesla CEO Elon Musk, who predicted back in 2010 that the Asian nation would be the second largest. on the Tesla market after the United States

Still, the country remains wary of relying too heavily on fully electric cars, even after Nissan Motor Co. paved the way for affordable electric cars with his Leaf more than a decade ago. Japanese carmakers and the government have instead chosen to promote hybrids, a category that Toyota Motor Corp. was a pioneer with the Prius about 25 years ago as a more economical model.

Now there seems to be a swirling movement amid international pressure. Toyota, Nissan and Honda Motor Co. introduced new strategies for electric cars, as foreign giants from General Motors Co. to Volkswagen AG have committed to abandoning cars with internal combustion engines completely in the near future.

The Japanese government, which promises to be carbon neutral by 2050, also seems to have shifted from its previous focus on protecting its own automotive industry. It now aims to halve emissions by 2030 from 2013 levels and is seeking to ban sales of gas-powered cars by the mid-2030s.

At the same time, it makes electric cars more affordable for consumers, doubling subsidies to a maximum of 800,000 yen ($ 7,000) in November.

This is encouraging for foreign electric car manufacturers, which have long since ceded the market to the hybrids of Toyota Prius and Leaf to Nissan, the world’s first mass-market electric car.

“The transition to zero-emission EV cars has not yet happened, but once it does, we will see that it will continue quickly,” said Matthias Shapers, president of Volkswagen Japan, noting that Tesla cars are already selling well in neighboring Taiwan, where its suppliers are thriving.

Tesla car in the showroomTesla cars are especially popular among the young and rich in Japan [File: Bloomberg]

Tesla cars are especially popular with young and wealthy people in Japan who live in urban areas, where electric car chargers are offered and join Musk’s unusual message, analysts say. Worldwide, Tesla shipped more than 936,000 cars last year, an 87 percent increase over the previous year, despite a global decline in chips that has forced carmakers to cut production.

“The fact that Tesla’s share price surpassed Toyota was huge” to increase brand awareness in Japan, said Seiji Sugiura, an analyst at Tokyo Tokai Research, adding that Teslas had become a status symbol.

IHS Markit estimates that Tesla sold more than 5,200 vehicles in Japan last year, up from about 1,900 in 2020, although it also predicts a short break this year as potential buyers wait for the new Model Y, which is expected to be available in Japan. around the end of the year.

Discounts could also put Teslas in the reach of more people. In February last year, Tesla Japan reduced the price of the long-range version of its Model 3 by 24% to about 5 million yen, reflecting a discount in China.

Tesla is expected to announce production soon at its Gigafactory in Berlin, its first plant in Europe, and another in Austin, Texas.

“Now that Giga Berlin goes online, there will be a lot of Chinese-made Tesla entering Japan in 2022,” as well as South Korea and India, said Tu Le, director of Sino Auto Insights, who also predicts additional price cuts in Japan.

However, some warn that it will be difficult for Tesla to expand in any meaningful way, especially as local carmakers invest more resources in electric vehicles. Even with a growing fan base of young, technology-savvy drivers, Tesla still struggles with poor brand recognition, and its direct-to-consumer business model also confuses most buyers accustomed to white-gloved treatment.

“It’s going to be a tough battle,” said Takeshi Miao, an analyst at Carnorama, an automotive consulting firm. “Japanese carmakers are strong worldwide, but even stronger at home. This is a very difficult market for foreign car manufacturers. “

Miyao predicts particularly strong competition from Toyota’s bZ series, a line of electric sports cars introduced last year. Toyota plans to spend $ 35 billion to accelerate its transition to electric vehicles.

“More Tesla owners day by day”

Nissan and alliance partners Renault SA and Mitsubishi Motors Corp. spend a total of 23 billion euros ($ 26 billion) over five years to launch 35 new battery-powered cars by the end of the decade.

Domestic carmakers will also have an advantage when it comes to providing charging stations backed by their existing dealer networks across the country, including in rural areas. Nissan already has a network of charging stations and plans to build more as part of a global project for 20 billion yen. Toyota has said it will equip electric car chargers at all its dealers across the country by about 2025.

Meanwhile, Tesla’s charging stations are concentrated in metropolitan areas. He will not say how many chargers he will build in Japan this year, but is currently looking for a manager to implement charging station projects, according to his website.

Volkswagen Japan has said it will build the country’s largest fast-charging network by equipping 90-150-kilowatt fast-charging devices at about 200 points by the end of this year. Installing them can cost up to 25 million yen each.

Stellantis NV has also started talking to energy suppliers to expand its charging network. Pontus Hagström, CEO of Stellantis Japan, said he wanted to see the government take a more active role.

“When it comes to infrastructure, it’s not a job for manufacturers. That’s what the government needs to work on, “he said.

A Tesla Arai fan says he is pleased with the Model 340’s range of about 340 miles. While he wants to have more charging stations on the highways, the slight inconvenience is offset by the lightness of the car’s technology, including over-the-air software updates and features, including the ability to lock the door with his smartphone.

“I see more and more Tesla owners day by day,” he said.





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