Japan ministry to promote next-generation EV battery development

The ministry intends to provide support through subsidies for the research and development on next-generation batteries and the establishment of domestic manufacturing bases, among other efforts. It also aims to build a structure to compete with Chinese manufacturers that have increased their presence in battery development.

The ministry will put together such a strategy in its execution plan to be compiled by the end of this year, in line with the government’s goal of reducing CO2 and other greenhouse gas emissions to net zero by 2050.

Batteries account for 30% of the production costs of EVs, and are considered to be the heart that affects the vehicle’s performance. As it will have an impact on Japan’s globally competitive automobile industry, the ministry will devise the policy as a high-priority issue. If the technology can be advanced to where battery capacity is enlarged, that could lead to the development of storage batteries for renewable energy sources such as solar and wind power which do not provide stable electricity.

The strategy is likely to focus on four points in regard to EV batteries: technological development, boosting competitiveness, international cooperation, and promotion of widespread use. Travel distance is a main challenge for EVs, and to exceed that of gasoline-powered vehicles, the ministry will aim for practical application of an all-solid-state battery, the next-generation battery of the current mainstream lithium-ion battery. It intends to provide a boost to start-up companies through subsidies to back technological development.

To increase competitiveness, the ministry plans to focus on developing a domestic supply chain for batteries, including raw materials. The nation’s auto industry has an annual shipment value of ¥60 trillion, accounting for about 20% of the domestic manufacturing. The industry encompasses a wide range, and the ministry wants to strike a balance between the environment and economic growth by supporting a system that enables the entire industry to smoothly shift to the next generation. For this purpose, the ministry also plans to support the enhancement of domestic battery-related factories through subsidies and other measures.

With regard to automobiles, Britain, the U.S. state of California and China have already announced plans to limit new automobile sales to EVs and other eco-friendly vehicles by 2035. Competition in the development of batteries, which are the heart of EVs, is expected to only intensify.

The global market for automotive batteries nearly quadrupled from 2016 to 2019, with Chinese companies, which have stepped up development and production, holding a global share of 40% in 2019. The Japanese share dropped from 35% in 2016 to 28% in 2019, yielding the top spot to China.

The Chinese government is also increasingly taking the lead in setting international rules for battery standards, safety criteria and other matters. If Japan falls behind in setting such standards, it could be forced to use technology that is disadvantageous to Japanese companies, and result in being left on its heels in production expertise. Regarding such systemic matters, the Japanese government plans to cooperate with Western countries to support the industry.

Also being considered is an expansion of subsidies to make it easier for consumers to purchase EVs.