Japanese automakers Toyota and Nissan are set to invest $7 billion (approximately 1 trillion yen) to boost the country’s electric vehicle (EV) battery production capacity, as part of a concerted effort to strengthen its position in the burgeoning global EV market. Japan aims to establish a reliable domestic supply chain by diversifying its manufacturing base, as it seeks to reduce dependence on China and South Korea, which currently control the majority of the market.
Despite being perceived as a laggard in the transition to electric vehicles, Japan remains poised for significant growth in this sector. Gross sales of home electric vehicles plunged by a staggering 39% during the first half of the year.
According to the Japan Mild Motor Automobile and Motorbike Association, domestic passenger electric vehicle sales reached 29,282 units as of June 2024, representing a 39% decline year-on-year. Electric cars’ market share of total passenger car gross sales declined by 0.7 percentage points, from 1.6% in the first half of 2023 to a relatively flat 1.6%.
A significant factor contributing to this issue is the scarcity of options. According to a Japan Car Importers Affiliation (JAIA) representative, Japanese electric vehicle (EV) markets are being significantly impacted by global automakers’ aggressive entry into the sector.
Global car manufacturers, such as China’s BYD, offer a broader range of designs compared to domestic brands, according to their representative.
BYD’s passenger vehicle imports skyrocketed by an astonishing 184% in the first half of 2024. Although just 980 BYD models have been imported to date, the brand is rapidly gaining traction as fresh designs arrive on the market.
Following the introduction of its inaugural electric vehicle, the Atto 3, in Japan last January, BYD has successfully rolled out several top-selling models, including the Dolphin and most recently, the Seal.
Chinese automaker BYD launched the Seal EV in Japan in June, with starting prices around $33,100 (¥5.28 million) for the inaugural model.
Because it has complete control over its entire supply chain, China’s BYD is poised to introduce low-cost EVs. As the world’s second-largest electric vehicle (EV) battery manufacturer, BYD trails only Contemporary Amperex Technology (CATL).
Toyota and Nissan are poised to significantly boost Japan’s electric vehicle (EV) battery production capabilities.
Japan seeks to fortify its electric vehicle (EV) battery supply chain as major companies like Toyota and Nissan are actively investing in the sector.
Toyota and Nissan are among several major Japanese corporations that will invest a combined total of approximately $7 billion, or 1 trillion yen, to increase storage battery production capacity by roughly 50%.
The additional funding will enable a significant increase in production capacity, with the output expanding by 40 GWh to reach a total of 120 GWh, up from the current 80 GWh. By 2030, the ambitious goal is to generate a staggering 150 gigawatt-hours of clean energy. The Japanese government is set to unveil a significant stimulus package worth approximately ¥350 billion ($2.44 billion) to bolster economic recovery efforts.
As the report highlights, with China and South Korea firmly established in the electric vehicle (EV) battery market, Japan aims to secure a stable supply chain.
Toyota is poised to invest approximately $1.7 billion (¥250 billion) in a move to expand its battery production capabilities through partnerships with two subsidiaries. Toyota plans to establish a state-of-the-art electric vehicle (EV) battery production facility, with the aim of powering its forthcoming all-electric Lexus models, scheduled to launch by 2029.
Nissan is set to invest approximately $1 billion (150 billion yen) by 2028, with the goal of establishing lithium-iron-phosphate (LFP) battery production facilities.
Panasonic will produce electric vehicle battery components for Subaru and Mazda as part of its partnership with the two Japanese automakers to enhance domestic manufacturing capabilities. The investment is expected to total approximately ¥550 billion, or around $3.8 billion.
Based on newly acquired knowledge, China continues to dominate the global electric vehicle battery market. As of July 2024, CATL commanded a dominant 37.6% market share, while BYD trailed closely behind with a 16.1% stake.
South Korean battery manufacturers LG Energy Solution and SK On claimed the third and fourth positions, respectively, in terms of global market share, boasting shares of 12.4% and 4.7%.
