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By the middle of the next decade, cars that run on gasoline may be as common at dealerships as VCRs are at electronic shops today thanks to an ambitious policy under consideration by Prime Minister Yoshihide Suga’s administration to buttress its decarbonization efforts.

But will Japan really be able to phase out sales of new petrol-fueled vehicles by the mid 2030s, as has been reported in local media? And how would such a plan — which would be the first time the country has put a time frame on ending sales of petrol vehicles — affect its auto sector, the pillar of the nation’s industrial might?

On Thursday, the industry ministry held a closed panel meeting to discuss the shift to electrified vehicles, with some members pointing out the importance of setting a specific deadline, according to an industry ministry official who briefed reporters. Industry minister Hiroshi Kajiyama has said that his ministry will compile a new plan by the end of this month.

Ahead of the move by the central government, the Tokyo Metropolitan Government earlier this week announced its goal to end the sale of new petrol cars excluding hybrids by 2030.

If Japan does ban the sale of new petrol cars by the mid-2030s, it will mark a significant shift from the country’s previous target. In 2010, the nation said it would reduce the ratio of new gasoline-only car sales to between 30% and 50% and bolster environmentally friendly cars to between 50% and 70% by 2030.

Whether the new goal is achievable for carmakers depends on whether the government permits gasoline-electric hybrids, experts say.

Media reports have so far said the plan is likely to allow automakers to continue selling hybrids, an indication that the government may want to avoid switching gears too fast for fears of the damage it would cause to the auto industry, especially auto parts makers. The flip side is that such an approach would fall short of efforts by other countries to reduce greenhouse gas emissions.

In Europe, countries such as the U.K. and Denmark plan to ban the sale of petrol and diesel cars starting in 2030 and hybrid cars from 2035.

If Japan were to also aim to completely phase out hybrids, that would raise the bar really high, said Tomohide Kazama, a senior consultant at Nomura Research Institute.

“Given that the current petrol-vehicle society will be drastically changing, it’s ambitious,” Kazama said.

But if sales of hybrid cars continue, “I think (Japan’s) target is quite achievable,” he said, as domestic firms have already developed hybrid technologies and hybrid vehicles are fairly popular in Japan.

According to the Japan Automobile Manufacturers Association, gasoline-powered vehicles made up about 60% of the total new car sales in 2019 while hybrids were about 34% and electric vehicles accounted for less than 1%.

The government had also set a new fuel efficiency standard of 25.4 kilometers per liter for carmakers to meet by fiscal 2030, a 32.4% improvement from the fiscal 2016 standard of 19.2 km.

In fiscal 2018, which ended in March 2019, the auto industry was responsible for 15.9% of carbon dioxide emissions in Japan.

“Previously, the government was rather hesitant to push policies that will drastically shift (Japan) to electrified vehicles because it won’t necessarily be all good for the auto industry,” said Yoshihisa Noro, research director at Mitsubishi Research Institute’s Mobility and Smart City Group.

Phasing out the sales of new petrol cars will be “challenging” in that context, but it’s clear the government is still refraining from accelerating the shift too quickly out of concern for the auto industry, Noro said.

If the plan becomes official, “it will have a tremendous impact on parts suppliers, so it needs to proceed carefully,” he said.

Noro, however, added that domestic parts makers have adjusted to drastic changes in the past, including changes to materials, and noted that the shift could also offer new business opportunities.

Still, Kazama of Nomura Research Institute said some negative impacts will likely be unavoidable.

“It’s not that combustion engines will completely disappear, since hybrid cars will still be sold on the market. But it will affect (parts makers),” as engines designed for hybrids are a bit different from conventional petrol cars, he said.

Permitting gasoline-electric hybrid vehicles would give carmakers more time to adjust, but would make it harder for the nation to achieve carbon neutrality by 2050.

Somewhere down the line, Japan will need to unveil a roadmap toward its carbon-neutral goal, Kazama said.

The government also needs to consider how consumers will react as hybrid and electric cars are typically more expensive than those that run on gas, said Tsubasa Hirai, a researcher at Mitsubishi Research Institute.

“Even if the government sets the target, it is possible that not many users would actually choose electrified vehicles,” said Hirai, adding that it will probably need to offer financial incentives including subsidies and tax cuts to motivate consumers.

According to Hirai, it will be a challenge to make compromises among the three stakeholders — the government, the auto industry and consumers — to create a win-win-win situation.

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