TOKYO, Oct. 26, 2022—A general assumption behind Japan’s awkward move on electric vehicle development and marketing has been concerns about potentially huge job losses for workers engaged in manufacturing complex auto parts and components necessary for gasoline-powered engines and drive trains. But that’s not the only reason.
Akio Toyoda, Toyota Motor Corp. CEO who also voices Japanese auto industry views as chairman of the Japan Automobile Manufacturers Association and other influential industry lobbies, has repeatedly said lukewarm comments about battery-powered EVs.
At a May 19, 2022 news conference, Toyoda said, ‘The enemy is carbon dioxide emissions, not the internal combustion engine: CO2 reductions should be achieved in all processes of energy – production, transport, and consumption.’ He said there’s no single path to the carbon neutral goal, urging regulators to keep diverse pro-choice technological options policy, instead of cornering the industry to adopting electric power alone.
Research and development efforts to date, Toyoda continued, have enabled competing automakers to conduct various experiments in concert, reminding them also that the carbon neutral objective is giving them an opportunity to improve their CASE (connected, automated/autonomous, sharing, and electrification) technologies.
If Toyoda is correct, the Japanese auto industry – which was the world’s first to commercially use EVs as far back as in the 1970s – by now should have launched EVs that can compete with Tesla, German and Chinese manufacturers. In reality, the Japanese are trailing woefully behind competition.
Some Japanese automakers, notably Nissan Motor Co. and Mitsubishi Motors Corp., are dead serious about EV development. Yet, they have run into an awfully uncomfortable gridlock that might arbitrarily cool potential consumer enthusiasms for EVs: Taxes.
On Oct. 26, 2022, the Ministry of Finance’s tax commission debated how to tax EVs that currently are classified into the lowest motor vehicle tax class, at 25,000 yen annually regardless of vehicle sizes, or less than half of comparable gas-powered cars.
In the first half of 2020, the total number of EVs sold in Japan was 4,727, or 0.3 percent of 1.669 million cars sold in that year. In the first half of 2022, that number grew to 30,348, or 1.9 percent of total sales during the half-year period, according to the commission’s report.
Commission members told the meeting that if EV sales continue growing, auto-related tax revenue would decrease sharply, threatening financing of road construction and repairs and thus urging them to explore taxing EVs such as collecting taxes according to travel distances cruised.
Japan has set a target to require all new vehicles sold to EVs by 2035. If the government slaps higher taxes to EVs, consumers are likely to slow purchases or hold on to old vehicles or buying gas-powered hybrids and others.
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Insight Into the Future