Why Japan has fallen behind on the electric car. Report Economist
Car manufacturers in Japan are lagging behind on electric technology: the fault, also, of a bet on hydrogen that has proved to be a loser. What emerges from an in-depth analysis of the weekly The Economist
Japan, a country that once dominated the global car market with innovations, has now become the laggard in electrification efforts. It is a reality that emerges well from a recent article in the Economist , which illustrates point by point the reasons for a delay which is fatally eroding the traditional Japanese leadership, risking making it miss the train of the most important industrial revolution of our times.
The Japanese car: sunset of an era?
There was a time when Japanese automotive was synonymous with innovation. The nation of the rising sun had the merit of putting an end to the season of Fordism by introducing that production model defined as just in time which revolutionized the entire sector. In short, thanks to Japan, that long phase in which, in the words of Ford, consumers could buy the cars they wanted as long as they were black, was definitively archived.
But those times have now passed and Japan is in great difficulty and behind schedule with regard to electrification. The numbers provided by the Economist speak for themselves: if in 2022 electric cars represented 13% of all cars sold globally (but 20% was reached in China), the market share in Japan was just 2 %.
The Japanese auto giants have failed to keep up with competitors such as Tesla and Volkswagen: none of them are represented in the top 20 of global electric car sales, and this despite Nissan and Mitsubishi having produced the first ones more than a decade ago electric car models. Toyota, the world's largest manufacturer with 10.5 million car sales in 2022, sold just 24,000 electric cars in the same year.
The precedent of consumer electronics
Commenting on the worrying trend of the electric car in Japan, the Economist suggests a parallel with what happened to those semiconductor and consumer electronics industries that saw Japan once in a dominant position. Tokyo had the demerit of not grasping some of the emerging trends and therefore let its younger competitors take the palm of innovation away.
This poses a major problem for Japan, where the auto industry accounts for 8% of all jobs and 20% of all exports in the country. There are those who rightly fear the dramatic economic and social consequences that would be triggered in the presence of a decline in this strategic sector.
Comeback attempts
In more recent times, however, the Japanese car manufacturers, realizing the situation, are making serious attempts to comeback. The symbol of the Rising Sun's recovery could be represented by the new CEO of Toyota, Sato Coji, appointed precisely to relaunch the electrification of his company. In his first press conference on April 7, the new CEO announced plans to launch ten new electric car models and reach 1.5 million sales by 2026.
Honda is following suit with plans to launch 30 electric car models by 2030, and a joint venture with Sony formed last year aiming to seize every opportunity in electrification. Nissan has also announced plans to produce nineteen new models by 2030, and the company now calls the electric car "the heart of our strategy."
The reasons for a delay
But what causes the delay of a country once considered avant-garde? For the Economist, the explanation must be sought precisely in the previous successes of the Japanese automotive industry, or in what Sato has framed as an exemplary case of the innovator's dilemma. That is, industrial leaders have been hesitant to embrace a new technology that could undermine the leadership gained in areas such as hybrid vehicles, in which Japan has been a pioneer.
The syndrome to which the engineers of the Japanese automotive giants have fallen has seen them tenaciously attached to traditional engines. Among the reasons that further explain the Japanese delay there was also the fear of the consequences that the transition to the electric car would have implicated for the vast network of suppliers, in consideration of the fact that electric cars are composed of fewer components than traditional or hybrid cars.
But another reason refers to the sufficiency with which the producers have looked at the revolution of the electric car and the conviction that, if necessary, their industries could have easily made the transition from the hybrid car to the electric car.
The illusion of hydrogen
There is another reason why Japanese manufacturers are lagging behind the competition and it is the bet made at the time on hydrogen, another technology that promised a carbon-free future.
Leaders such as Toyota were convinced that the transition to hydrogen would be decisive for the future of the car. And a famous premier like the late Abe Shinzo promoted policies during his terms between 2012 and 2020 to make Japan a "hydrogen society",
When Toyota put its first hydrogen sedan, the Mirai, into production in 2015, it donated a copy to Abe himself. But this soon proved to be a dead end, so much so that Toyota itself sold just 7,500 hydrogen-powered vehicles in total in the domestic market.
The issue of subsidies
Another reason for the Japanese delay refers to the differences in the subsidy regimes compared to what is chosen by other areas of the world such as China, Europe and America. Unlike the latter, Tokyo has much less incentive for the electric car.
And if the government is now aiming for complete electrification of the sector by 2035, in contrast to what other executives are doing, it also includes hybrids in this objective. Also, as a legacy of the recent past, Japanese hydrogen subsidies still remain very substantial.
Japan among the last in the standings
This combination of reasons helps explain why Japan fell far behind in the most important industrial revolution of our times.
In the words of Japanese management consultant Murasawa Yoshihisa, it's as if Japan is as stuck in the past as it was in the days of the Tokugawa shoguns, when the Japanese refused to look at what was happening in the outside world. And so those cars made in Japan which until a few years ago were synonymous with energy efficiency and therefore environmentalism, now risk representing a sort of emblem of climate denialism.
It is no coincidence that, as shown by a recent study by Greenpeace, the three main Japanese car manufacturers, i.e. Toyota, Honda and Nissan, rank well last in the ranking of the world's leading companies in decarbonisation efforts. And it's no coincidence that, as a Global Mobility survey concluded, consumers who yearn for an electric car are increasingly turning away from brands such as Toyota and Honda.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/giappone-auto-elettrica/ on Sat, 22 Apr 2023 06:05:57 +0000.