Japan Electric Vehicle Market

Japan’s transition to electric vehicles (EVs) has just begun. In the near future, Japanese consumers and businesses will seek American EV products and solutions, presenting U.S. companies with increasing business opportunities in components, systems, software and aftermarket products.

Japan’s passenger EV market set record sales in 2022. According to the Japan Automobile Dealers Association (JADA) and Japan Mini Vehicles Association (Zenkeijikyo), in 2022, 58,813 battery electric vehicles (BEVs) were sold in Japan, which was 2.7 times more than in 2021. The BEV ratio (BEVs share of passenger car sales) grew to 1.7% in 2022, surpassing 2021 (0.6%) and exceeding the 1% threshold for the first time. BEV sales in Japan are expected to further increase as Japan targets 100% environmentally friendly vehicles by 2035, and as consumers consider the environmental and economic benefits of EVs.

The recent growth in BEV sales in Japan was led by a booming demand for Kei EVs.  Kei cars translate as “light-weight automobiles” and are Japan’s smallest highway-legal passenger cars with restricted dimensions and engine capacity.  Kei EV sales grew from 554 units in 2021 to 27,221 units in 2022 and accounted for 46.3% of total BEV sales. The best-selling Kei EV models were the Nissan Sakura and Mitsubishi eK X EV. Both cars received the “Japan Car of the Year” award; this marks the first time Kei EVs have been selected in the award’s 43-year history.

In order to stimulate demand for EVs, the Japanese government continues to offer subsidies for purchases of new EVs with a revised budget of 70 billion Japanese Yen (approximately US$501 million) for fiscal year 2022. The subsidy amounts for new purchases are 650,000 Japanese Yen (US$4,656) for BEVs, 450,000 Japanese Yen (US$3,223) for Kei EVs and Plug-In Hybrid Electric Vehicles (PHEVs), and 2,300,000 Japanese Yen (US$16,474) for Fuel Cell Electric Vehicles (FCEVs). If a vehicle meets certain requirements, such as having a power supply function that can draw power from an onboard outlet (1500W/AC100V), or a capability of extracting power via an external power supply or V2H charger, the vehicle may qualify for a higher subsidy amount. In this case, the maximum subsidies are 850,000 Japanese Yen (US$6,089) for BEVs, 550,000 Japanese Yen (US$3,940) for Kei EVs and PHEVs, and 2,550,000 Japanese Yen (US$18,268) for FCEVs.

For more information about the Japanese EV market or opportunities in the EV supply chain, please contact the U.S. Commercial Service at Office.Osaka-Kobe@trade.gov.