Japan is making it rain Yen to catch up with U.S. and European EV adoption

They say any problem that can be solved with money isn’t the problem. The problem is not having money.

With that in mind, Japan is looking to make it rain 37.5 billion Yen (~RM 1.4 billion) in a bid to drive EV adoption in the country as it languishes behind the likes of the U.S. and Europe. Of the amount earmarked for subsidies in a supplementary budget for fiscal 2021, 25 billion Yen (~RM 935 million) will be set aside as purchase incentives for environmentally friendly vehicles.

The latter amount will see the purchase incentives for electric vehicles doubled to as much as 800,000 Yen (~RM 30,000), putting Japan’s efforts on par with the U.S. and Europe. Furthermore, the country will subsidise charging infrastructure as well.

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However, the programme will only cover plug-in hybrids and fuel cell vehicles with regular hybrids like a Toyota Prius are excluded from the subsidies, according to a report by Asia Nikkei.

As global pressure presses industries to shift away from traditional fossil fuels, Tokyo needs to play catch up as electric vehicle adoption remains sluggish’ accounting for less than 1 percent of new passenger vehicles sold in the country last year.

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The amount of new passenger vehicles sold in Japan for 2020 was 3,809,981, translating into less than 38,100 units of eco-friendly vehicles. EVs accounted for around 15,000 units.

While Japan's Environment Ministry had raised the incentive cap to 800,000 Yen (~RM 30,000) in a supplementary budget last fiscal year, the caveat of it being eligible only when all of the electricity used for charging at home or work comes from renewable sources proved to be a difficult hurdle for consumers to overcome.

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Under the programme, fuel cell vehicles will be eligible for incentives of up to 2.5 million Yen (~RM 93,000) but the difference in price from similarly sized gas-fuelled vehicles will factor into the calculations.

For example, Toyota’s Mirai fuel cell vehicle will be eligible for an incentive of 1.4 million Yen (~RM 52,000), a bump up from the current 1.15 million Yen now (~RM 43,000). Aside from this, the programme has set aside 6 billion Yen (~RM 224 million) for new hydrogen filling stations.

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The entire effort is strategized at the government’s ambitious efforts to make all new passenger vehicles sold in Japan by 2035 eco-friendly. Similarly, in Europe EVs account for more than 10 per cent of new vehicles sold.

Apart from Germany, France and Italy, as well as the U.S., even South Korea offers similar incentives to Japan’s new subsidies. The move is being applied in a number of countries as they attempt to help their economies rebound from the pandemic slump.

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As always, limited charging infrastructure is one of the primary hurdles that has been a stumbling block for EV adoption in Japan. There’re only 2.3 chargers per 10,000 people at the end of fiscal 2020, compared with 6.9 in France, for example.

From the current 30,000 charging stations nationwide, Japan will be looking to raise that number to 150,000 units by 2030.

Across the pacific, the U.S. has passed a USD1 trillion (~RM 4.2 trillion) bipartisan infrastructure bill that sets aside USD7.5 billion (~RM31.6 billion) to build 500,000 charging stations over the next few years.