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Japan to double EV subsidies to match U.S. and Europe

  • November 23, 2021
  • , Nikkei Asia , 2:51 a.m.
  • English Press

MAYUMI HIROSAWA, Nikkei staff writer

 

TOKYO — Japan will double its purchase incentives for electric vehicles to as much as 800,000 yen ($7,000), on par with similar measures in the U.S. and Europe, and subsidize charging infrastructure as Tokyo looks to catch up with other major advanced economies.

 

The government intends to earmark 37.5 billion yen ($329 million) for the subsidies in a supplementary budget for fiscal 2021, devoting 25 billion yen of that total to purchase incentives for environmentally friendly autos. The subsidies for electric vehicles will be raised to up to 800,000 yen.

 

The program also will cover plug-in hybrids and fuel cell vehicles, while other hybrids remain excluded.

 

With global pressure building to pivot away from fossil fuels, Tokyo hopes to accelerate the country’s sluggish adoption of electric vehicles, which made up less than 1% of all new passenger autos sold in Japan last year.

Japan’s Environment Ministry raised the incentive cap to 800,000 yen in a supplementary budget last fiscal year, but only when all of the electricity used for charging at home or work came from renewable sources, a costly and difficult prerequisite for consumers.

 

Fuel cell vehicles will be eligible for incentives of up to 2.5 million yen, though the difference in price from similarly sized gas-fueled cars will factor into the calculation. The subsidy for Toyota Motor’s Mirai, for example, will come to 1.4 million yen, up from 1.15 million yen now. The budget also will earmark 6 billion yen for new hydrogen filling stations.

 

The government seeks to make all new passenger vehicles sold in Japan eco-friendly by 2035. But this goal includes hybrids, which remain popular while electrics have languished, with just 15,000 sold domestically last year. 

In the European Union, where hybrids have fallen outside the scope of similar electrification targets, electrics account for more than 10% of new vehicles sold.

 

Germany, France and Italy, as well as the U.S. and South Korea, offer incentives of similar size to Japan’s new subsidy scheme. A number of countries are using such measures to help their economies rebound from coronavirus-induced slumps.

 

Limited charging infrastructure has inhibited broader use of electric vehicles in Japan. The country had 2.3 chargers per 10,000 people at the end of fiscal 2020, compared with 6.9 in France.

 

Japan looks to expand the charging station network to 150,000 by 2030 from about 30,000 now. About 6.5 billion yen will be set aside in the new supplementary budget, though this may cover only a few thousand chargers at most.

 

The $1 trillion bipartisan infrastructure bill passed in the U.S. last week sets aside $7.5 billion to build 500,000 charging stations over the next few years. Japan could consider a similar form of sustained funding, beyond the one-off budgets it has used so far, if the government sees a need to further accelerate its electrification push.

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