Report warns Japan faces jobs crisis and economic decline as auto industry lags in transition to electric vehicles

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May 10, 2022, Tokyo, Japan – Japan faces a declining auto industry and economic decline if it does not quickly embrace the electric revolution taking place elsewhere in the global auto industry. That’s the warning of a report launched today by the international non-profit Climate Group, based on research by two highly respected Japanese auto industry experts and using data from a collection of reliable sources.[1].

Read the report in English here.

Read the report in Japanese here.

The Climate Group report makes 12 policy recommendations on infrastructure, energy strategy and subsidies to deal with the impending crisis in Japan’s auto industry. The report also points out that a change in manufacturers must also be accompanied by ambitious policies to promote the manufacture and adoption of electric vehicles by the Japanese government.

Sandra Roling, Head of Transportation at Climate Group, says: The Japanese auto market is still heavily hybrid driven while the international market is rapidly shifting towards electric vehicles (EVs). Not participating in this change puts Japanese industry at a serious disadvantage.

“While manufacturers themselves started to hear this message after COP26, the Japanese government must also recognize the writing on the wall.”

Japan’s industrial leadership is under threat

  • Japan is the third largest automobile manufacturing country in the world and has one of the largest automotive markets.
  • Japan is also the world’s second largest car exporter, supplying almost 13% of passenger vehicles in 2019.
  • 82% of cars produced by Japanese manufacturers are destined for overseas markets, which includes vehicles produced in Japan and exported, as well as those produced overseas.
  • If overseas exports fall – the report warns that if Japan’s auto industry does not switch to fully electric vehicles, it could be 50% by 2040 – this could lead to a loss of 1.72 million jobs, a 14% drop in GDP and a catastrophic collapse in auto industry profits of almost 80 trillion yen.

Urgent policy interventions required

Japanese manufacturers are starting to do the right thing. In an announcement in December 2021, Toyota said it would offer 30 electric models worldwide by 2030. In January 2022, the Renault-Nissan-Mitsubishi alliance announced plans to invest $26.3 billion (3 trillion yen) to launch 35 new electric models by 2030. 2030.

Unfortunately, government policy does not follow market trends, and as a result, Japan’s economic security is at risk.

Common error

The report launched today addresses several key misconceptions about electric vehicles and shows that:

  • Even when the electricity used by vehicles is created by fossil fuels, it is still better for the environment to use an electric car than a hybrid.
  • Electric cars are more fuel efficient than hybrid models, and as technology develops, this is expected to increase.
  • Only fully electric vehicles will enable the decarbonization of the Japanese automotive sector, necessary for Japan to meet its commitment under the Paris Agreement.
  • There is an opportunity for a job boom – the deployment of charging infrastructure is expected to create over 100,000 jobs in areas such as manufacturing, installation and operational management.
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