Chinese electric vehicles find a niche to make short-haul deliveries in Japan

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Logistics firms in Japan, scrambling to cut costs and make the most of the pandemic-inspired online shopping boom, are finding an unlikely white knight in Chinese electric vehicle makers, whose pickup trucks are making deliveries last mile not only cheaper, but also cleaner.

Tokyo-based SBS Holdings Inc., a publicly traded logistics company that offers deliveries, recently struck a deal to buy 2,000 electric light trucks over five years from Japanese start-up folofly. The cars will be made by a unit of Dongfeng Motor Group Co. as well as other Chinese automakers. Sagawa Express Co., meanwhile, will use 7,200 low-cost electric minivans made by Guangxi Automobile Group Co.

“Japanese electric vehicles do not cover our costs,” said SBS Holdings Chairman Masahiko Kamata. “Japanese automakers say it’s impossible to lower prices, so we had to buy cheaper vehicles. We cannot ask our customers to accept higher rates just because we have more expensive trucks.

Like most places around the world, online commerce has skyrocketed in Japan during COVID as people order everything from food to clothes and electronic gadgets right to their doorstep. These increased sales increase the carbon footprint of logistics companies. Yet Japan has pledged to reduce its emissions by almost 50% from 2013 levels by 2030. To achieve this goal, 90% of vehicles sold in the country that year will have to be battery electric. , according to McKinsey & Co.

SBS plans to eventually have a fleet of some 10,000 commercial electric vans that it can use for e-commerce deliveries. The small trucks can travel around 200 kilometers on a single charge and cost around 3.8 million yen ($33,000).

“Range is not a big issue for last-mile deliveries,” said Akira Miyahara, a manager at SBS Sokuhai Support, the rapid delivery unit of SBS Holdings. Although there is a question mark on the performance of Chinese vehicles after three or four years, for now, after 12 hours at night on the charger, there is no problem.

Although Japan isn’t currently a huge market for EVs – EV penetration is just 1% compared to 30% in some cities in China – Chinese automakers sense an opportunity. BYD Co., which counts Warren Buffett among its backers, already controls about 70% of Japan’s pure electric bus market and aims to have 4,000 such buses on the road in the country by 2030.

Cheaper in China

“Japan is well established in the automotive industry due to its reputation as a quality-driven market, so entering the Japanese market is an important step,” a Shenzhen-based BYD spokesperson said. “BYD Japan will continue to promote transportation electrification to accelerate the achievement of carbon neutrality.”

Dongfeng Motor representatives did not respond to requests for comment. Guangxi Automobile said its deal would “accelerate the development of Japan’s new energy micro-logistics market.”

Thanks to Chinese government incentives and subsidies, the average price of electric cars has fallen in the world’s largest car market, while it has risen in Europe and the United States. that Chinese consumers can buy an all-new electric vehicle for as little as $4,200. The price in Europe climbs to at least $17,880 and again to $28,170 in the United States

“If Japanese automakers do nothing, China will take over the industry,” said Kamata of SBS Holdings.

According to Tu Le, general manager of Sino Auto Insights, it is difficult for logistics companies to be both patriotic and profitable.

“These delivery companies are in a really tough spot because they have a mandate to clean their vehicles, but they are beholden to shareholders to be a profitable and healthy company,” he said.

It’s not just Chinese companies that are getting into it. Cenntro Electric Group Ltd., an American manufacturer of commercial electric vehicles, received approval in November to sell light trucks in Japan, and its vans will be used by Amazon Fleet, the local subsidiary of Amazon.com Inc. partner of delivery, and Hana Cupid, Japan’s largest floral gift association.

Cenntro CEO Peter Wang sees a bright future for home delivery in the country due to the aging of Japanese society. The company is even planning an assembly plant, potentially in Fukushima, to locally produce electric vehicles and export some to Southeast Asia, he said.

“Electric vehicles are still a cheaper option than hydrogen” for light trucks, Wang said, referring to the fact that Toyota Motor Corp., for example, is also exploring hydrogen as a future fuel for clean cars. “They are practical, easy to use, easy to repair, easy to load. I’ve spoken to many fleet managers in Japan and they haven’t found the right vehicle to do this.

Some observers fear that Japan’s nascent electric car industry is facing a crisis similar to the one that hit its home appliance sector. After dominating the world in the 1980s and 1990s, brands like Panasonic, Sony, Toshiba and Sharp lost out to cheaper Chinese alternatives.

“If Japanese companies stick to producing cars, foreign companies will come,” said Hiroyasu Koma, CEO of folofly, the company working with SBS and Dongfeng Motor on the first-generation fleet electrification strategy. .

China has been working to create an entire infrastructure around electric vehicles, including investing in Contemporary Amperex Technology Co. Ltd. — now the world’s largest maker of electric vehicle batteries — as a national strategy, Koma said.

According to Carnorama analyst Takeshi Miyao, Toyota, the world’s largest automaker, still has the ability to turn things around, especially if it focuses on making high-performance solid-state batteries. “Chinese electric vehicle makers are at the forefront when it comes to price, but you never know if they will still be leaders three years from now,” he said.

And Japanese truck manufacturers are starting to fight back. Isuzu Motors Ltd. will begin mass-producing electric trucks in 2022 while Toyota’s Hino Motors Ltd. plans to sell the Dutro Z mini EV early this summer. Logistics company Yamato Holdings Co. will use two Hino electric vehicles until May and track how CO2 emissions are reduced.

But with Japanese electric trucks expected to cost about three times as much as diesel trucks, logistics companies may struggle to buy them, according to Kamata.

— With the help of Tian Ying.

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