Summary
Toyota and Nissan, along with other Japanese companies, investing $7 billion to increase EV battery output in Japan with government support to establish a domestic supply chain.
Despite being a laggard in the EV market, Japan aims to boost sales and increase the share of electric vehicles in passenger vehicle sales.
Foreign automakers are gaining ground in Japan’s EV market due to a wider variety of models available compared to domestic manufacturers.
China’s BYD is making significant inroads in Japan with low-cost EV models and complete control over its supply chain.
Japan is aiming to reduce its reliance on China and South Korea in the EV battery market by ramping up domestic production with Toyota, Nissan, and Panasonic making significant investments.
Article
Japanese companies, including Toyota and Nissan, are set to invest a total of $7 billion (1 trillion yen) to increase the nation’s electric vehicle (EV) battery output. The Japanese government is also playing a role in this effort to establish a domestic supply chain and reduce reliance on China and South Korea, which currently dominate the EV battery market. Japan has been criticized for being slow in the transition to all-electric vehicles, with domestic EV sales dropping by 39% in the first half of the year.
The Japan Light Motor Vehicle and Motorcycle Association reported that domestic passenger EV sales totaled 29,282 vehicles through June 2024, a significant decline from previous years. The lack of options is cited as a major reason for the decrease in sales, with foreign automakers like China’s BYD gaining traction in Japan’s EV market due to their wider variety of models. BYD’s passenger car imports surged by 184% in the first half of 2024, showcasing the impact of foreign brands on the market.
BYD, which controls much of its supply chain, is able to launch low-cost EVs and has established itself as a key player in Japan with models like the Atto 3, Dolphin, and Seal. These models have been well-received in the market, attracting consumers with their competitive pricing and advanced technology. As BYD continues to expand its presence in Japan, domestic automakers are feeling the pressure to catch up and develop more competitive EV offerings.
Toyota and Nissan are set to significantly increase Japan’s EV battery output through substantial investments. These investments are aimed at boosting storage battery production by approximately 50%, with the goal of reaching an output of 120 GWh by 2030. The Japanese Ministry of Economy, Trade, and Industry plans to offer financial support to facilitate these efforts, with Toyota and Nissan leading the charge in expanding battery production capacity.
Toyota is expected to invest around $1.7 billion (250 billion yen) in ramping up battery production at its subsidiaries and opening a new EV battery plant to supply upcoming Lexus EVs. Nissan, on the other hand, will invest approximately $1 billion (150 billion yen) in LFP battery production starting in 2028. Additionally, Japan’s Panasonic will collaborate with Subaru and Mazda to boost domestic production of EV battery parts, with an estimated investment of $3.8 billion (550 billion yen).
China continues to dominate the global EV battery market, with companies like CATL and BYD leading the way in market share. South Korea’s LG Energy Solution and SK On also hold significant positions in the market. By increasing domestic EV battery production through investments and partnerships, Japan aims to establish a stable supply chain and compete more effectively in the rapidly growing EV sector. This shift highlights the country’s commitment to embracing electric vehicles and reducing its dependence on foreign markets for key components.
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