EDITORIAL | Invest in EV Batteries to Protect Japan's Core Industries

The government and private sector are moving to strengthen the domestic supply chain for electric vehicles. That requires increasing production of EV batteries, a core component of the vehicles.

Four automakers, along with battery manufacturers, will invest a total of approximately ¥1 trillion JPY ($6.7 billion USD) by 2028. The project is being led by Toyota Motor Corporation, Nissan Motor Corporation, Subaru Corporation, and Mazda Motor Corporation, and also with support of up to approximately ¥350 billion (about $2.4 million ) from the Ministry of Economy, Trade and Industry.

Under the Economic Security Promotion Act, the government has designated EV batteries as specified critical products. Japan used to be the world leader in this segment. However, Chinese and Korean manufacturers, combined, now hold just under 90% of the global market share.

Strengthening a Domestic Supply Chain

Meanwhile, the possibility of natural disasters, conflicts, and trade friction is always present. Excessive reliance on overseas manufacturers could risk Japan's economic security. It is therefore important to boost domestic manufacturing capabilities. 

At the same time, we must vow not to repeat past failures, such as in semiconductors. Although Japanese semiconductor makers once held more than half the global market share, they could not continue large-scale investments. That led to their decline. Therefore, appropriate investment in EV batteries to protect Japan's core industries must be sustained through public-private collaboration.

EV sales are currently showing signs of slowing. This is also forcing overseas automakers to reassess their strategies. Nonetheless, domestic manufacturers should continue to invest in EVs while closely monitoring market trends. 

Endorsing the Future of Decarbonization

Meanwhile, the view that EVs will be the core of automotive decarbonization technology in the medium to long term is unchanged. Furthermore, for the domestic automobile industry to maintain its competitiveness, it is essential to establish a solid domestic supply network now. Government support will likely be needed to accomplish that.

According to the four automakers' plans, the supply of batteries will begin flowing between 2025 and 2028. With this investment, domestic production capacity will increase by about 1.5 times in total battery capacity. 

EV batteries account for roughly one-third of the manufacturing cost of an EV and can also impact the vehicle's performance. In addition to domestic production capacity, it will be necessary to develop optimal batteries for the performance of different EVs, including variables such as cost and range. 

Nissan plans to manufacture lithium-ion iron phosphate batteries that do not use expensive cobalt or nickel. Hopefully, automakers will also be able to double the range of their EV batteries. They should also expedite the practical use of solid-state batteries for use in luxury vehicle models. This is an area where Japan holds the lead.

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(Read the editorial in Japanese.)

Author: Editorial Board, The Sankei Shimbun