8 Mar 23

Subsidies for Tokyo residential charging

Reluctant to adopt the transition to EVs, the Japanese OEMs don’t seem to be aligned with the Tokyo Metropolitan Government. The lawmakers in Japan’s capital are ambitious and aim for half of the new car sales in 2030 to be electric.

To support this strategy, and starting from a very poor baseline, the number of EV chargers will need to increase dramatically to support the electrification targets.

Lessons learned from China

Incentives work, as China has successfully demonstrated, and the Tokyo Government is willing to spend. EV chargers in apartment buildings will become mandatory (for 20% of the parking spots). Both new and existing apartment buildings can apply for significant subsidies for EV chargers, offered cumulatively by the Tokyo and the national Governments.

Status quo

The EV uptake in Japan has been slow compared to other industrialized countries, topping at 2% of new car sales in 2022 (or 84.000 units). According to International Energy Agency, there were only 29.000 chargers across the country in 2021.

There are a few reasons why Japan isn’t following the global EV trend. For one, the powerful Japanese automotive sector is not a fan of EVs… Toyota’s chairman has been heard stating that a massive electrification is not the right way forward, not from a sustainability perspective, nor from a transition perspective. Consequently, as Japanese consumers buy Japanese cars, there aren’t that many EVs in showroom.

In addition, Japan is regulation-heavy; this means that installing EV chargers is a red-tape exercise first. Also, house-owner associations, especially in Tokyo’s apartment buildings, are not keen to allow for the installation of chargers.

Will it work?

What Japan’s EV strategy misses is alignment. OEMs go one direction whilst the Government goes the other way, and consumers receive mixed messages. Also, incentives are not comprehensive of the full ecosystem. China has taught the rest of the world that promoting EVs start with setting standards (manufacturing processes, range, recyclable materials…), prohibiting unwanted behavior (limiting registrations of ICE vehicles) and providing significant tax incentives for the ecosystem and the consumers, topped with an extremely clear message, as was the case in the “Made in China 2025” strategy. Japan misses key elements and doesn’t deliver a total story – it needs more, and fast.

Authored by: Yves Helven