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SBD Explores: Electric Transition - Why are Japanese OEMs Lagging in the BEV Race?





Japanese OEMs were early adopters of hybrid electric vehicles, having a significant impact on the automotive carbon footprint.


However, despite being pioneers initially, Japanese OEMs have now found themselves lagging.


Our report will delve into Japan’s automakers’ reluctance to embrace BEVs and examine the strategies employed by them to regain their competitive edge.


What is happening?

Due to their reluctance in releasing competitive BEVs, Japanese OEMs are experiencing a decline in their market share within the EV industry.

  • In the past 4 years Japanese OEMs PHEV global sales have dropped significantly from around 22% to 6%. They’ve also lost global BEV market share of the already small percentage they had.

  • Toyota claims that 90 HEV batteries could be made using the raw materials used in the long-range battery of a single BEV which has the potential for more carbon reduction overall.

  • Japanese OEMs do believe in an electric future, but challenges can be addressed efficiently by transitioning gradually from HEVs to BEVs. These challenges include Japan's low resources leading to supply chain issues, destructive mining for resources, and reliance on polluting fossil fuels for electric energy.

  • Each of these factors together has meant that hybrids and hydrogen have been prioritized over BEVs.

  • As more consumers switch to BEVs, the lack of Japanese BEVs on sale has led to a subsequent loss of EV market share.


Why does it matter?

Japanese OEMs were the first to bring BEVs to market with the Nissan leaf in 2010. Since then, major players have risen in the BEV market whilst Japanese OEMs haven’t kept up.

  • Japanese OEMs could have built on their existing knowledge and architecture of HEVs to produce BEVs and have an advantage over the competition.

  • Toyota and Honda’s transition from HEVs to PHEVs to BEVs took around 20 years, whilst other major OEMs took much less time. This is partly since Japanese OEMs prefer to perfect technologies before large commercial rollouts.

  • Due to Japan's limited resources for batteries, their government has placed priority on the hydrogen strategy to envision a carbon-neutral society. Consequently, Japanese OEMs chose to invest in hydrogen technologies rather than focusing extensively on pure BEV technologies.

  • This focus on hybrid and hydrogen vehicles has allowed the competition to gain a massive lead in BEV development and commercialization. It may be difficult for the Japanese OEMs to gain market traction in the BEV space especially as competitors have been winning conquests in the form of consumers looking for BEV choice.



Where next?

In the Japanese market, hydrogen had been considered the next step from hybrid technology. Until now, where OEMs have been forced to join the BEV race.

  • Toyota, Honda and Nissan have announced plans to increase their EV market share. Each company has announced plans to launch a comprehensive range of electric vehicles by 2025, 2026, and 2030, respectively.

  • Solid-state batteries represent the latest breakthrough in battery technology, and Toyota, Honda and Nissan are all optimistic about achieving production of solid-state batteries by the mid to late 2020s. If this advancement is viable, it will enable these OEMs to surpass their current competitors by leveraging this innovative technology.

  • Japanese OEM’s new focus is on BEVs, as they continue research of hydrogen technology. Further progress of hydrogen is promising, but not yet feasible. It is still unclear whether hydrogen will ever become a viable fuel source for the automotive industry.


  1. Japanese OEMs are actively manufacturing and beginning to unveil their upcoming lineup of BEVs, built on new platform.

  2. As the latest BEVs begin to be sold and gain popularity, Japanese OEMs will start to take market share from major players, such as Tesla, VW and BYD.

  3. Solid-state batteries will become ready for implementation into new platforms, with Japanese OEMs having already invested heavily in the technology.

  4. Continued development of Hydrogen technology could lead to a breakthrough within the industry and may provide a serious challenge to BEVs.


What to watch out for?

Although Japanese OEMs have become BEV laggards, they have the potential to be leaders in future hydrogen and solid-state battery technologies.

  • Even though Japanese OEMs have lagged behind in the EV race, each Japanese OEM is taking a different approach to the EV scenario. Toyota is gradually stepping up from HEV to PHEV to BEV while Nissan made a direct transition from HEV to BEV.

  • Having BEVs in production means implementing solid-state batteries will be much easier than creating a new platform.

  • At the same time, a hybrid platform allows for easy integration of future zero-carbon fuels, and as Toyota points out, even with petrol or diesel, hybrids may do more to reduce carbon emissions than BEVs.

  • Japanese OEMs, by diversifying their powertrain investments, may be able to surpass existing leaders in the EV industry. The reason behind this lies in the Japanese OEMs' ability to expedite the adoption of both solid-state batteries and hydrogen technology. While many prominent OEMs are shifting towards BEVs, they would need to develop completely new platforms for hydrogen fuel cell technology.


How should you react?

Observe

Understand how Japanese OEMs have been laggards but now could become leaders with solid-state and hydrogen technology.


Evaluate

Consider whether your internal roadmap extends beyond today's BEV technology.


Strategize

Plan to collaborate with leaders or implement the technology if there is already the technical expertise necessary.


Interested in finding out more?

Most of our work is helping clients go deeper into new challenges and opportunities through custom projects. If you would like to discuss recent projects we've completed relating to Electric Vehicles and EV technology, contact us today!



 

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