New electric car sales in Japan FY 2015-2021

In the fiscal year 2021, approximately 54.73 thousand new electric vehicles were sold in Japan, increasing from around 34.48 thousand in the preceding fiscal year. Electric vehicle sales peaked in 2017 when plug-in hybrid cars experienced a growth spurt within the Japanese automotive market.

Focusing on domestic demand

In light of emission laws and competition from foreign automakers, Japanese car brands have broadened their portfolio to include battery electric vehicles (BEV) and plug-in hybrid vehicles (PHEV). Although these are still niche products, domestic manufacturers are trying to adapt electrification to Japanese best-sellers, such as mini cars. However, low prices and high convenience characterize mini vehicles. For now, prices, range, charging time and infrastructure hinder the commercial success of electric mini vehicles. Nonetheless, Nissan and Mitsubishi, for example, have taken up this challenge with the joint venture development of two mini BEV models, starting sales on the Japanese market around mid-2022.

E-fuel, electricity – or both?

Aside from adjusting engines to reduce emissions, electrofuels (e-fuels) are another promising way to make vehicles 'greener'. Japanese engineering and chemical companies have commenced research on such carbon-neutral fuels storing the energy of renewable energies. These may provide higher energy density than batteries and utilize existing infrastructure, such as pipelines and gas stations. Moreover, they may enhance the environmental performance of new vehicles – whatever engine they run – and vehicles on the streets when mixed with gasoline. It could take decades to replace the whole Japanese car fleet with zero-emission vehicles. Hence, both will be needed to reach emission targets.