Technical standards are typically dismissed as the province of industry insiders, tedious esoterica that is of concern only to obsessives. In reality, standards matter greatly. Not only do they set levels of accessibility, safety and security for products, but the proponents of particular standards usually have an advantage in exploiting them for commercial purposes. That is why there has been celebration among Japanese manufacturers of the agreement among Japanese and Chinese industry groups on standards for the next generation of chargers for electric vehicles (EVs). That agreement will likely become the global norm, affording those manufacturers a real boost in the race to dominate a critical market.
The reduction of greenhouse gas emissions depends on decreases in the use of fossil fuels, and central to that effort is the move away from internal combustion engines to EVs. It is estimated that a record 1.1 million EVs were sold worldwide in 2017, and that number is projected to increase 10 times to 11 million in 2025 and then to 30 million in 2030. If all vehicles are counted — cars and busses — there are already 4 million EVs on the road today and the 5 million mark will be topped next March. The International Energy Agency reckons that total EV ownership will reach 125 million by 2030, but it could even go as high as 220 million with aggressive government policies.
The single biggest market is China, which accounts for over a third — 37 percent — of passenger EVs sold worldwide since 2011 and around 99 percent of e-buses. Just over a quarter of new EV sales will occur in Europe and slightly less will be sold in the United States. China is expected to account for nearly 50 percent of the global EV market by 2025. Japan has sold just 120,000 all-electric cars in the last decade, a small fraction of the 7.3 million hybrid cars that have been sold here over the same time.
Sluggish sales at home have had little impact on the ambitions of Japan’s EV manufacturers, however. They are poised to ride that global wave and the agreement signed last month with their Chinese counterparts on standards for next-generation chargers is critical to their success.
There are currently three standards worldwide for next-generation quick chargers for EVs: China’s GB/T, of which 220,000 chargers have been installed (as of last April); Japan’s CHAdeMO, of which 18,000 units have been installed; and America’s Combined Charging System (Combo), with 7,000 units. The distinction between the first two is less sharp than is apparent: Japan has provided technologies for GB/T, and as a result, it and CHAdeMO have much in common.
Japan’s CHAdeMO Association and the China Electricity Council signed an agreement late last month to develop a single standard for next generation “fast chargers,” or chargers with an output of over 500 kilowatts — 10 times more powerful than the ones currently in use in Japan — which will facilitate the quick charging of even large vehicles.
Given the slow growth of EV sales at home, a combined Japan-China standard will be a boon to Japanese manufacturers. The new standard will account for more than 90 percent of the global market for fast chargers, and manufacturers plan to have standard-conforming models on the market by 2020.
China’s determination to promote eco-friendly cars as a means of tackling its horrific pollution problems means that there will be ample opportunities for companies positioned to exploit an evolving and expanding market. From 2019, Beijing will set a production quota for EVs and hybrids for auto manufacturers, and anticipates that EV sales will comprise 20 percent of the entire automobile market by 2025.
Japanese companies are already in position to exploit these agreements. Last month, Nissan and its partner Donfeng began production of the Sylphy, their first low-cost battery electric vehicle (BEV), a car specifically designed for the Chinese market and priced accordingly: With government subsidies it is half the price of the Nissan Leaf. The joint venture will produce another five models by the end of the year, and 20 new EV models by 2020.
The standards agreement that was struck last month is testimony to the vital importance of being “a rule maker, not a rule taker.” Japan and its companies need to be leaning forward in international negotiations, in both the public and private sectors. This requires a change in approach for Japan, which has been content to set domestic standards and enjoy the protection that they afforded to home markets. A sluggish economy and shrinking population demands that Japan be more outward looking to try to shape the external environment in which its companies must compete. Last month’s agreement is a strong start.
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