Back to Japan. The Japanese government has had three policy directions for the development of the EV industry, starting with the 10-year "First Electric Vehicle Popularization Plan" in 1977. The backdrop was the 1970 World Expo Osaka, where 300 electric tour buses deployed in response to the deteriorating air pollution in Japan since industrialization drew the attention of the world. Moreover, the first oil crisis, occurring in 1973, imposed a greater sense of urgency that prompted Japan to switch to new energy, so the Plan in 1977 offered tax incentives and EVs at the same price as gasoline vehicles to various public and business organizations for trial use, in the hope of reaching 200,000 units by 1986 with the presence of the monetary factors. The use of liquid lead-acid batteries and nickel-cadmium batteries had several downsides. Not only were the batteries large and heavy (about 500 kg), but they also required the addition of water when charging. Plus, they had a short lifespan (2-3 years at most), a range of less than 100 km, and a maximum speed of only about 70 km/h. Unable to attract the public, the EVs could not be effectively promoted and in turn, ended up as a failure.
After that, a 4-year plan was introduced in 1996 to develop an electric subcompact car. At the time, Japan already had sealed nickel-metal hydride and lithium-ion batteries with a range of about 200 km. However, at the same time in late 1997, Toyota launched the Prius, a hybrid with excellent fuel economy (fuel consumption averaged 5.7L/100km, 2001 US EPA data), and due to the lack of charging piles and the short range of BEVs, the Prius became the synonym for the most popular green car. In 2008, 10 years after its launch, the Prius reached a remarkable sales record of 1 million units worldwide. The achievements of the Toyota Prius in hybrids have profound influence on later policy formulation for vehicle electrification in Japan.
After the signing of the Paris Climate Agreement on April 22, 2016, Japan's Ministry of Economy, Trade and Industry (METI) announced at a conference with government agencies and industry participants, including Toyota, Nissan and other Japanese auto giants, on July 24, 2018 that in response to the following development of EVs, the Japanese government planned to have new cars sold in Japan limited to EVs and hybrids by 2050. Another goal set was to reduce greenhouse gas emissions from single passenger cars by 90% from 2010 to 2050. The then Japanese Minister of METI, Sekō Hiroshige, said at the conference, "Japan wants to promote electrified vehicles on a global scale to achieve net zero emissions globally. This is an achievement exclusively for Japan's top auto industry to enable." A couple of years later, on January 18, 2021, the then Prime Minister Suga Yoshihide stated in his policy address to the National Diet that the goal was to have 100% of new cars sold electrified by 2035. This policy goal was specified in the revised "Green Growth Strategy" promulgated on June 18, 2021. The electrified vehicles in the target include pure/battery electric vehicles (BEVs), hydrogen fuel cell vehicles (HFCVs), plug-in hybrid electric vehicles (PHEVs) and hybrid electric vehicles (HEVs). So in fact, Japan will only ban the sale of gasoline vehicles, instead of switching to 100% net zero emission vehicles, by 2035. At the end of 2020, there were 82.47 million vehicles registered in Japan, of which 11.95 million were electrified, accounting for 14.5%. The electrified vehicles included 130,000 BEVs, 150,000 PHEVs, 5,170 HFCVs, and 11.67 million HEVs. From the above figures, we can see that hybrids are definitely the mainstay of electrified vehicles in Japan.
Such a policy direction entails Akio Toyoda, who took over as president of Toyota in 2009. Akio Toyoda's statements carry some weight with Japan's EV policy. For example, at the year-end press conference of Japan Automobile Manufacturers Association (JAMA) in mid-December 2020, Akio Toyoda, in his capacity as chairman, said that EVs were being overhyped, "The development of electric vehicles does not do the environment much good. The more electric vehicles are produced, the more the problem of CO2 emissions will worsen." Then in September 2021, in his capacity as chairman of JAMA, he personally and bluntly called out to the Japanese government, saying if Japan blindly followed the lead of European and American countries in their plans to phase out gasoline vehicles, the Japanese economy would be hit hard, with 8 million fewer new cars produced and 5.5 million jobs lost by 2030. These comments explicitly indicated Akio Toyoda's concern about the world leaping towards net zero emissions EVs without supporting measures for electric power development, investment in charging pile facilities, and so on. In addition, the Japanese auto parts supply chain, which is dependent on Toyota, could be wiped out by the rise of next-generation EVs. For these reasons, Akio Toyoda has repeatedly stood against the EV wave. However, in China and the EU, the world's No. 1 and No. 3 car markets, BEV sales exceeded 10% market share in 2022, and are expected to exceed 20 million units and 25% market share in 2025. As the world's No.1 seller in 2022, Toyota is bound to suffer unimaginable repercussions in sales in the next 3 to 5 years with its leader taking an approach like that.
It is clear that to be successful, government policies must lead the industry in a forward-looking direction, keep up with the prevailing trend, satisfy consumers' needs, and work with the industry. I have no doubt the Japanese auto industry has enjoyed superb sales and an excellent reputation worldwide since the 1980s, thanks to its high quality and impressive fuel economy, which of course is attributed to the powerful supply chain synergy in the Toyota Production System. Nonetheless, in the face of the once-in-a-century change in the auto industry, if Toyota, a long-term leader in the traditional auto field, does not make up its mind to invest in the new field of electric vehicles, and instead tries to protect the rights of employees and its own interests in the current supply chain of the gasoline engine auto industry, Toyota will be doomed to lose more and more sales.
Akio Toyoda's voluntary resignation at this time, beyond his humble words about his own personal limits as a car maker, tells us the inevitable handoff of leadership to the new generation for the diversification of next-generation automotive products. The reorganization of the entire supply chain of the automotive industry is not to be stopped, and only by tackling the challenges and creating new pictures will the reorganization be able to receive market feedback that the industry deserves. I'm also looking forward to a beautiful new world built by the changes and innovations in the automotive industry in the next 10 to 15 years.