Japan's Electric Vehicle Sales Surge... Global Car Companies Targeting the Market

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] As the Japanese electric vehicle (EV) market rapidly expands, global automobile manufacturers are vying to secure market dominance. Tesla, the world’s number one EV brand, is reportedly expanding its presence in Japan, particularly among young consumers.

According to Bloomberg on the 7th, foreign EV sales in Japan reached 8,610 units last year, tripling compared to the previous year. The foreign EV market in Japan, which was around 353 units in 2016, has grown more than 20 times over the past five years.

Within Japan, EVs account for only 1% of the total vehicle market, making their presence minimal. Although Nissan launched the world’s first EV, the Leaf, in 2010 and led the global market, the Japanese automotive industry and government have traditionally preferred hybrid vehicles over EVs. However, with growing global environmental awareness, EV popularity has increased, prompting Japanese automakers such as Toyota, Nissan, and Honda to begin investing in EV-related ventures. The Japanese government has also set a carbon neutrality goal for 2050 and has been providing subsidies of up to 800,000 yen for EV purchases since November last year.

Tesla appears to be the biggest beneficiary of these changes in Japan. According to IHS Markit, Tesla is estimated to have sold about 5,200 EVs last year, a threefold increase from 1,900 units in 2020. Bloomberg reported analysts’ views that "Tesla is especially popular among young urban residents and affluent consumers." Seiji Sugiura, an analyst at Tokyo Tokai Research, explained, "The fact that Tesla’s stock price has surpassed Toyota’s has had a significant impact (in Japan)."

Recently, Hyundai also announced its re-entry into the Japanese market after 13 years, planning to sell EVs 100% online. Based on the EV Ioniq 5, Hyundai aims to target the market by implementing all purchasing functions online, including ordering, payment, insurance subscription, and vehicle registration.