Japan loves its minicars. Can it embrace EV versions too?

On Japan’s slow road to embracing electric vehicles, one type of car promises to help accelerate the change above all others: the humble minicar.

A common sight on the nation’s streets — they accounted for roughly 40% of new vehicle sales last year — producing a truly successful electrified version would likely be a big contribution to promoting the adoption of EVs. Now Nissan and Mitsubishi Motors have launched their electrified takes on the tiny cars.

The Sakura minicar model by Nissan and the eK x EV model by Mitsubishi — both unveiled Friday — were developed by NMKV, a joint venture funded by the two companies, and will debut this summer. The prices start at around ¥2.3 million to ¥2.4 million, but by using government subsidies for environmentally friendly cars, they can be purchased for around ¥1.8 million, the firms said.

“Nissan Sakura and eK x EV symbolize our alliance and will be a game-changer for Japan’s EV scene,” Nissan CEO Makoto Uchida said at a news conference.

The basic specs of the Sakura and eK x EV models are nearly the same, as both are equipped with 20-kilowatt-hour batteries and can drive about 180 kilometers on a single charge.

Nissan and Mitsubishi are part of a three-way alliance with Renault.

Electric minivehicles are expected to play a key role in accelerating Japan’s slow shift to EVs, but their development also comes with various challenges, industry observers say.

Minivehicles whose engine is smaller than 660 cubic centimeters and body size is limited to 3.4 meters in length, 1.48 meters in width and 2 meters in height, known as “kei cars” in Japan, have been a favorite choice of domestic consumers, as they are generally more reasonably priced and their running costs are lower than standard-sized cars.

While hybrid vehicles have been popular as environmentally friendly cars in Japan, battery-based EVs have been a niche choice, accounting for just 1% of new cars sold last year.

Major Japanese automakers are looking to bolster investment in EVs to strengthen their competitiveness in the field and increase EV lineups, including by adding electric minicars.

Daihatsu, which boasts the largest share of the domestic minicar market, and Suzuki, the second biggest player, will also introduce electric models by 2025.

“Since kei minicars are the main vehicle category in Japan, I think the electrification of such vehicles is a quite big issue,” said Tomohide Kazama, partner at the Nomura Research Institute.

Given that making hybrid minivehicles is technically challenging because it is difficult to install all the necessary parts in their small bodies, simple battery-based electrification makes more sense, Kazama said.

Also, shorter driving ranges are often seen as a disadvantage of EVs, but minivehicles are usually used for shorter trips than regular cars, so consumers can be more relaxed about the issue, he added.

Although the debut of Nissan and Mitsubishi’s new minivehicle models will likely add impetus to the push toward EVs, automakers still face some hurdles.

One major challenge is the lack of charging spots, said Hisashi Yoshitake, senior consultant at the Nomura Research Institute, adding that many places such as urban parking lots and parking spaces for condominium residents are not equipped with such systems.

According to the Chademo Association, there were 7,700 fast EV chargers in Japan as of May last year. That figure is still quite small compared with the number of gas stations nationwide, which stood at about 29,000 in March last year.

Maiko Hara, senior associate at Deloitte Tohmatsu Group, said that the popularity of minivehicles would likely transfer to their electric counterparts going forward.

Nonetheless, the low resale values of EVs is expected to be an issue, she said. EV resale values diminish quickly, mainly due to the degradation of batteries.

For instance, the resale value of a 5-year-old used Nissan Leaf EV can be less than 20% of the original price.

“It’s possible that electric minivehicles won’t be widely accepted unless (the industry) overcomes this resale value issue,” said Hara.

While Nissan and Mitsubishi are looking to establish a lead in the domestic EV market, this is not the first time an electric minivehicle has debuted in Japan.

In fact, Mitsubishi introduced an electric minivehicle called i-MiEV in 2009 — the first mass-produced electric car. But the automaker struggled with sluggish sales and reportedly stopped production in March last year.

“It was too early in several respects,” said Yoshitake.

Electric minivehicles failed to become a compelling option for consumers, as price tags were higher, they had a shorter driving range and charging spots were scarce, while global and domestic momentum toward decarbonization was not as strong, he said.

In addition, automakers have said making battery-powered minivehicles at a low cost is an arduous task.

Price tags of gasoline minivehicles generally range from ¥1 million to ¥2 million, but when it comes to electric versions, the lithium ion batteries themselves cost some ¥800,000 to ¥900,000, Hara said.

“(High battery costs) make it tough for carmakers to turn a profit,” she said.