With the Tokyo 2020 Olympics delayed for at least a year, we’re all going to have to wait a bit longer to see Toyota’s 3,700 vehicle fleet of battery-electric, plug-in hybrid, and hydrogen fuel-cell vehicles prepared especially for use at the games, along with the hydrogen-fueled Olympic torch.
In any case, that’s all more of a PR and advertising exercise than a true indication of what’s going on with the growth of electric vehicles in Japan.
Shulman Advisory will soon be making a comprehensive report on the sector available for purchase. If you’d like to learn more, contact us below and we’ll get in touch with you when the report is ready for release.
In the meantime, let’s take a look at some of the basics, as well as a few the more interesting things going on with electric vehicles in Japan.
#1: Government Policy
Targets
The Japanese government first outlined the importance of the country shifting away from conventional internal combustion engines (ICE) automobiles in a major way in the Next Generation Automobile Strategy published by the Ministry of Economy, Trade and Industry (METI) in 2010. The strategy aims to reduce the share of new cars with ICEs sold in Japan to 30%-50% by 2030. In the same period, it aims to increase the combined share of plug-in hybrid vehicles (PHV) and electric vehicles (EV) to 20%-30% and that of fuel cell vehicles (FCV) to 3%. That said, the strategy also pointed out that cars with ICEs should continue to be produced by the country’s automakers to stay competitive in emerging markets.
Subsidies
The government is providing substantial subsidies meant to promote the shift to electric vehicles and their integration into Japan’s energy supply system and society.
#2: Natural Dovetail with Resilience
2018 and 2019 shined a spotlight on the need for a more resilient electricity supply system in Japan.
The destructive West Japan Floods of July 2018 caused extensive power outages, and the Hokkaido Eastern Iburi Earthquake less than two months later knocked out power to all residents – a whopping 5.3 million people in 2.95 million households – in, according to the Federation of Electric Power Companies (FEPC), the first outage in Japan’s history to take down an entire grid zone. It’s important to remember that the interconnections between Japan’s grid zones are minimal – and in this case, Hokkaido’s interconnections to the Tohoku zone were temporarily knocked out as well.
The typhoons in 2018 and 2019 saw Japan’s utilities – most notoriously, TEPCO in 2019 – struggle to restore power in areas suffering from outages in a timely manner.
Another good indicator of the extent of the vulnerability is the damage to solar plants caused by some of these same natural disasters.
All this finally precipitated action by expert committees at METI in late 2019 leading to 2020 legislation aimed at improving the resilience of Japan’s electricity supply system in a number of ways. The legislation includes new requirements for better planning and coordination among electricity companies and their contractors to restore power quickly, greater transparency by the companies as to the status of power restoration work as it unfolds, and the creation of a new licensing system intended to encourage the proliferation of resilient microgrids around the country. In addition, the equivalent of tens of millions of US dollars have been allocated for technical pilot programs aimed at increasing resilience.
In this context, we expect to see growth in the types of pilot projects and public-private-partnerships which have put electric vehicles to use in supplying power to emergency facilities in the aftermath of some of these disasters.
The cities of Sapporo and Muroran used their municipal fleets of fuel cell vehicles to supply power to buildings containing emergency facilities in this manner after the 2018 Hokkaido earthquake, and Yokohama City is well known for having configured the charging infrastructure for its municipal fleet of electric vehicles to be used in this way when necessary.
Stories of electric vehicles put to use along these lines will undoubtedly increase in the years ahead.
#3: Broader Consumer Electricity Market
Interesting things are also afoot in the power market and adjacent industries. Of course there are virtual power plant pilots utilizing EVs and other such grid-focused efforts, but many companies are also starting to take advantage of a variety of different touchpoints with consumers who are making the shift to electric vehicles.
Homebuilders and solar installers are offering combined solutions utilizing home energy management systems (HEMS) and bidirectional EV chargers to integrate EV batteries into homeowners’ residential power systems, and power companies have started offering electricity rate plans specially tailored for consumers who are charging their EVs at home.
Credit: Solar Journal (https://solarjournal.jp/smarttechnology/19011/2/)
We’ll take a look at the nexus between home manufacturers and advanced power systems in a future post. We expect this area to continue to grow apace in Japan.
Deeper Dive
If you’d be interested in purchasing our comprehensive report on the EV and FCV sector in Japan, leave your email address below and we’ll get in touch with you when the report is ready for release.