Overseas car makers consider opportunity in Japan with electric vehicles

Nine-tenths of the 5 million cars sold annually in Japan are from domestic firms Toyota, Honda and Nissan

A battery pack being installed on a Hyundai Ioniq 5 electric vehicle. The last time Hyundai Motor sold a car in Japan was in 2009, when it pulled out after years of dismal sales. Bloomberg

In September, Narumi Abe did something that is rare in Japan: she bought a foreign car, picking a Peugeot e-208 over a Honda e because, she said, the Peugeot can travel longer distances between charges.

Ms Abe joined a tiny but growing band of Japanese drivers who are eschewing home brands for foreign battery electric vehicles (EVs).

While the trend is unlikely to make a big dent in overall sales, it highlights a perception that many domestic car makers have been slower to embrace battery EVs, focusing instead on hybrids, hydrogen fuel cells and alternative fuel for internal combustion engines.

“I wanted to buy something that would be best for the environment,” said the 30-year-old, who runs a company in Tokyo selling farm produce.

Toyota has committed 8 trillion yen ($69 billion) on electrification up to 2030 and expects to sell about 3.5 million battery EVs worldwide by then. That represents about a third of Toyota's current annual sales.

Germany's Volkswagen predicts half its cars will be battery EVs by then.

Nine-tenths of the five million cars sold annually in Japan are from domestic firms such as Toyota, Honda and Nissan.

But while overall car sales in Japan, not including small light vehicles, dipped 3.2 per cent last year, sales of foreign models rose 1.7 per cent.

Imports of battery EVs jumped almost three times to a record 8,610 vehicles, the Japan Automobile Importers Association reported.

Analysts estimate about half of those were Teslas. Volkswagen, Europe's biggest car maker, is one of the foreign makers that see a battery-EV opening in Japan.

It plans to sell more than a dozen such models in Japan by 2024, including cheaper Audi and Volkswagen sports utility models this year that will attempt to attract a broader portion of consumers, country manager Matthias Schepers said in January.

It expects battery EVs to account for a third of Audi sales, or about 10,000 vehicles, in Japan for 2025, he said. The VW group will expand the installation of fast chargers to 250 of its own showrooms by the end of this year, he said.

Stellantis, owner of the Peugeot brand that Ms Abe bought, is also expanding its line-up in Japan, with two new models going on sale this year.

They are being joined by South Korea's Hyundai Motor, which this month said it is returning to Japan 12 years after it left because of poor sales. Japanese drivers will be able to order its Nexo SUV hydrogen fuel cell EV and its Ioniq 5 mid-size crossover battery EV from May.

To bolster its chance of success this time round, the South Korean company has linked up with a car -haring service operated by online social gaming company DeNA and insurance company Sompo Holdings to let Hyundai owners rent out their zero-emission cars.