Japan Is at the Vanguard of Electric Vehicle (EV) Adoption
Networked EV 2011: Smart Grids and Electric Vehicles, a conference held on October 20 in San Francisco, gave attendees a good glimpse of the EV market in America. While U.S. demand still can't be described as anything other than nascent, the general tone of the event was notably more upbeat than last year. At least now there are a few EVs on the road: from January through September about 7,200 Nissan Leafs, and about 3,900 Chevy Volts, have been sold. "The cars are here and the auto industry believes in this," said Saul Zambrano, Senior Director of Customer Energy Solutions at Pacific Gas & Electric, in his address at the event.
Demand in the U.S. for all green vehicles remains a small fraction, however, of that in Japan. The much larger Japanese market reflects the country's focus on reducing carbon emissions, which underpins the advanced green car technologies and products of domestic manufacturers, as well as the substantial government subsidies offered to buyers. In the aftermath of the Great East Japan Earthquake in March 2011, the already positive image of the industry further improved, as the Japanese saw reliably chargeable green cars providing emergency services while gasoline-deprived conventional vehicles stood idle. Faced with ongoing energy shortages and the vulnerability of fossil fuel sources, the industry should continue to progress.
Let's look at some recent developments in Japan for green vehicles, i.e., low or no emission, high-mileage autos including all-electric cars (EV), hybrids, and plug-in hybrids (PHEV), as well as similar vehicles such as the fuel-cell car.
Japan Leads the World
The Japanese green vehicle market is the largest in the world. According to Nikkei, in 2010, worldwide sales of hybrids and EVs were an estimated 900,000, only about 1% of all new cars sold. In Japan, cumulative sales of Toyota's Prius through 2010 were about one million, while Honda's Insight has sold 250,000 units. Green vehicle sales in Japan for 2010 were an estimated 500,000, more than 10% of all new car demand.
At least part of the strong market for green vehicles in Japan is attributable to the substantial supports provided by the Japanese government. The assistance primarily consists of purchase price subsidies and tax relief for buyers. While local municipalities offer various kinds of support as well, the primary subsidies come from the central government. For fiscal 2011, for example, both Toyota's plug-in hybrid Prius and Tesla's all-electric Roadster may receive the maximum subsidy of 1 million yen (about US$12,800).
New Green Vehicle Ventures
Although most green vehicles in Japan are made and sold by the big manufactures -- like Toyota, Nissan, and Honda -- there are some new ventures too. One of the most notable is SIM-Drive, a start-up that originated from Keio University and has received investment from major Japanese companies, including Benesse and Marubeni. SIM-Drive is developing a new EV and targeting mass production by 2014. The venture boasts collaboration with some 34 companies, including non-Japanese firms such as PSA Peugeot of France and Bosch of Germany.
Have Some Tea While You Charge Your EV
One of the obstacles to widespread adoption of EVs is "range anxiety," because maximum driving distances per charging for currently available, smaller EVs are short. The fear may be largely unwarranted: for example, the top driving range of the all-electric Nissan Leaf is roughly between 60 - 130 miles -- long enough for even the vast majority of U.S. users, 78% of whom drive less than 40 miles a day. Still, worries of running out of power and spending long stretches of time charging a vehicle remain a major concern for consumers.
The current leading EV battery charging methods do take a long time. Level 1 adapters take eight hours or so to charge a small EV like the Leaf, while higher-speed Level 2 adapters take two hours. Although these times are not a problem for overnight charging at home, they are too long to wait at charging stations while on the road.
One of the faster, Level 3 standard batteries that have been developed was produced by a coalition comprising Tokyo Electric Power Company (TEPCO), Nissan, Mitsubishi and Fuji Heavy Industries (the manufacturer of Subaru vehicles) and Toyota. The technology is imaginatively branded CHAdeMO, an abbreviation of "CHArge de MOve" or "charge for moving". It is also a play on words: Ocha demo ikaga desu ka meaning "How about some tea (while charging)?" CHAdeMo provides 80% of chargeable capacity to the Leaf in 30 minutes -- indeed, just enough time for a quick trip to the coffee shop or tea house. CHAdeMo is currently being deployed as a pilot in Japan, as well as in some U.S. locations.
Opportunities to Enter Japan Market
When considering green vehicles in the international context, most people think of Japanese cars in the U.S. market. After all, Toyota's Prius is the most successful green vehicle in the U.S. market, and Nissan's Leaf is one of the first EV offerings. However, there are some notable examples of non-Japanese companies entering the marketplace in Japan.
For example, Tesla Motors, based in Silicon Valley, is appealing to the high-end of the market, and last year made its first shipments of its zero-emissions Roadster to Japan. Toyota, which is developing a sports-utility vehicle with Tesla, and Panasonic, which is providing the company with battery cells, are both major shareholders. Tesla Chief Executive Elon Musk has stated that he expects Japan to become the company's largest market outside the U.S.
Other companies that are looking to Japanese markets for its EV products are GM Japan, whose Chevrolet Volt made its official Japanese debut in May 2011, and Better Place, which has partnered with Tokyo's largest taxi operator, Nihon Kotsu, to bring the world's first electric taxis with switchable batteries to Japan in 2010.
Finally, it should be noted that EVs and PHEVs are at the forefront of applying new information technologies that link people, automobiles, and homes, thereby providing complete and integrated control of energy consumption. In this space, Microsoft and Toyota are collaborating on telematic services, based on the Windows Azure operating system, that offer voice- and touch-activated communication, entertainment features, and battery-charging management for electric and hybrid vehicles.
Note: This article was written by Cando Advisors -- a consulting firm supporting clients on international business development, strategic alliance, and investment, focusing on the Japanese market -- and co-author Bob Schneider.
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