A year ago, we presented two potential scenarios for the future of the battery electric vehicle (BEV) market in Japan. The first one was that BEV sales in Japan would gradually grow in all segments evenly. In Japan, the Premium segment is covered mainly by European OEMs replacing their internal combustion engine (ICE) models with BEVs, and in the medium term, Toyota is planning to introduce Lexus BEV models as replacements for all Lexus ICE/hybrid models. This transition is expected to be completed by 2035. On the other hand, for the non-premium segment, Nissan and Mitsubishi started launching their BEVs before other Japanese OEMs. Now all the Japanese OEMs have announced their BEV strategies. In addition, it is worth noting that both Hyundai and BYD have begun introducing their BEV models in Japan.

The second scenario was that it would be difficult for BEV sales to grow evenly in every segment, as Japanese consumers still have strong anxieties about BEVs due to high prices, battery durability concerns, limited range, time required for battery charging and lack of a charging infrastructure. Thus, we assumed Kei car BEVs would be accepted more than the non-Kei car BEVs. Kei cars are predominantly used for daily commutes or short shopping trips within a city, and drivers do not have to worry about charging their batteries frequently as they won’t be driving long distances. This assumption was based on the favourable sales of Nissan Sakura and Mitsubishi eK X EV, which were launched in June 2022.

After reviewing the results from January to July 2023, it was observed that the BEV share of all passenger sales remained low at 2.6%. However, it was noted that the volume of BEV sales increased by 30%, totalling 55,924 units. These figures indicate a growing trend in the BEV market. Additionally, it was found that the Nissan Sakura and Mitsubishi eK X EV, both Kei car-based BEVs, comprised 51% of all BEV passenger car sales. Following the success of the Kei car based-BEVs, other Kei car manufacturers plan to develop and launch their own models. When they are launched, the ratio of Kei car-based BEVs is expected to rise further. As this trend continues, we can say that the latter scenario, that Kei car-BEVs will lead the BEV market growth initially, is more likely to be realised. As sales of BEVs soar, consumers will realise that BEVs are not inconvenient and will begin to switch to larger models, replacing their ICE or hybrid models. For OEMs without Kei car-based BEVs, increasing their BEV sales presently seems challenging.

Since the Japan Automobile Manufacturers Association (JAMA) conducts a bi-annual consumer survey, we will have to wait until next year to assess current consumer attitudes towards BEVs. However, here is a result according to the recent user survey conducted by one of the major car rental/share companies. Out of the group who do not own BEVs, 84% have not even thought about buying one. The remaining 16% have considered purchasing a BEV before but were deterred by the common concerns mentioned above. This is an unofficial survey, but it reflects the low BEV share in the Japanese market. Therefore, easing the anxieties of Japanese consumers is crucial for increasing BEV sales in the non-Kei car sector.

When analysing the current sales actuals, there is a potential challenge to increasing sales of BEVs. Despite the growing availability of options such as BEVs, Plug-in Hybrid Electric Vehicles (PHEVs), and Fuel Cell Electric Vehicles (FCEVs), there was a significant rise in sales of hybrids between January and July 2023, up 30% compared to the same period in 2022. This increase has also resulted in hybrids now holding a 46% share of the passenger vehicle market, up from 42% last year.

There have been no ‘Dieselgate’ type ICE scandals to persuade Japanese consumers to switch away from ICE-based vehicles, and they continue to be held in high esteem, especially hybrids. As a result, the market share for hybrid vehicles remains high. Plus, recent increases in gasoline prices may have led more Japanese consumers to opt for hybrid vehicles. This could mean that the growth of the BEV market in Japan will continue to be sluggish for a few more years as hybrids are seen by most buyers as the go-to technology for best efficiency.

Asia-Pacific Automotive Analytics Team, GlobalData

This article was first published on GlobalData’s dedicated research platform, the Automotive Intelligence Center