Japan to end EV subsidies, a reason why EV sales are slow

TOKYO, Aug. 8, 2022—It’s sort of a tale of two cities: The United States is set to continue EV subsidies up to $7,500 while, in stark contrast, the Japanese government’s subsidy program that extends up to 850,000 yen ($6,500) would be discontinued at the end of October for budget constraints – as had been the case for solar power and other Japanese government climate change mitigation programs.
The governmental Next Generation Vehicle Promotion Center (http://www.cev-pc.or.jp/english/) had released a statement that the center ended accepting EV and charging equipment installation subsidy applications on Aug. 2 because the program’s budget (17.7 billion yen) had been consumed.
It’s a revisit to Japan’s subsidy programs for a broad area of industry including climate change mitigation, manufacturing facility modernization, labor productivity enhancement and other initiatives.
Back in the late 1970s to early 1980s, when solar power generation was almost unheard of in the world, Japan’s Ministry of Economy Trade and Industry launched a subsidy program to encourage solar power system installation on private homes and corporate buildings as part of the ministry’s 1974 ‘Sunshine Plan.’ The plan, seeking to produce solar, geothermal, hydrogen power, was aimed at diversifying energy production away from fossil fuel in response to the 1970s two ‘oil shocks.’
The plan extended subsidies for those energy source development but no sooner than installations gained impetus the Japanese government discontinued them all, concluding that critical mass had been achieved to drive energy diversification on their own inertia.
The real reason was the Ministry of Finance’s budget policy to discontinue subsidy programs after head starts.
So, with no subsidies and at a time of low oil prices, all those undertakings faltered – miserably – while China literally stole relevant technologies from Japan and dethroned Japan as then the No. 1 solar power producer and now had become the unrivaled, ultra-scale solar panel producer. And now, the Chinese have done it on EVs and threatening to do the same on hydrogen fuel cell technology.

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