As the Nikkei Asian Review reports, Japan will require auto makers to improve fuel efficiency for hybrid cars by 32% by 2030. There is already a 24% improvement mandate from 2008 set to expire in 2020. Additionally, although electric and hybrid vehicles only accounted for 1% (50/50 split) of domestic auto sales, regulations have been put in place to make sure these vehicles account for 20-30% of auto sales before 2030. Finally, electric vehicles will have to begin posting electric fuel efficiency which will be converted to km/h. These strict increases are ambitious targets designed to help the Japanese market catch up with zero-emissions vehicles in Europe and China.
The trend of increasing average fuel economy for an auto producer is not limited to Japan, and realistically incentivizes auto producers to gradually offer more environmentally friendly cars. This requires companies to make environmentally friendly options equally economically viable. Yet this should not prove to be a problem, as international EV and hybrid sales have grown exponentially, and continue to increase market share. Although Japanese EV and hybrid cat sales make up 1% of the market, international Japanese car sales dwarf domestic sales. This has lead to the recent partnership between Toyota and Chinese battery producers to keep up with demand, as well as the launch of 5 new EV vehicles.
Yet the increase in EV plug in vehicle models actually runs contrary to Japan’s long standing sustainable power goal: creating a “hydrogen society.” The energy ministry has already begun preparing for the Olympics by planning to deploying 100 hydrogen busses and putting 40,000 hydrogen cars on the road (by contrast, there are currently only 11,000 in the world). However the long term goals are far more potent with a goal of 200,000 hydrogen vehicles in the next six years.
Japan begun focusing on hydrogen cars in 2015, which some believe to be the cause of a drop in plug-in vehicle sales. A focus on hydrogen cars may seem strange given that Japan has the highest density of EV chargers in the world, yet because most Japanese people live in dense areas without an easy place to park and charge a car, maintaining a standard refueling method while making vehicles electric (hydrogen is converted to electricity within the car) is seen as an easier solution. Thus the Japanese government has instituted many subsidies to promote infrastructure to allow for hydrogen refueling at gas stations; however, it is expected that hydrogen will initially only be used for industrial applications, as battery powered electric vehicles are currently more economically viable to consumers.
Thus, taking all of these elements together, Japanese government policy changes and Toyota’s move to partner with Chinese battery makers begin to make sense. Mandating improved fuel efficiency plays into a larger attempt to increase consumer purchases in EV, hybrid, and hydrogen powered cars. Yet despite Japan’s focus on a hydrogen society, the infrastructure is not prepared for hydrogen cars; however, it is prepared for EV vehicles, making it a safe assumption that it’s 2030 goal is feasible. Finally, given the increasing focus on environmentally friendly cars internationally and domestically, one would expect Toyota to begin investing in battery production rather than relying on Chinese manufacturers, especially given Japan’s current focus on automotive competition with Europe and China. Domestically, this decision makes sense, because Japan has dedicated itself to subsidizing hydrogen infrastructure, meaning battery powered cars in Japan may soon lose popularity. Yet given the recent standards change, international popularity for battery powered and hybrid cars, and competition with Chinese automotive producers, one would either expect to see Toyota and other auto manufacturers invest in increased battery production in the near future, or an effort to export hydrogen technology and infrastructure efforts to make domestic efforts economically viable.
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