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In the fiscal year 2023, approximately * thousand new next-generation vehicles were sold in Japan, increasing from around * thousand in the preceding fiscal year. 

Focusing on domestic demand

In light of emission laws and competition from foreign automakers, Japanese car brands have broadened their portfolio to include battery electric vehicles (BEV) and plug-in hybrid vehicles (PHEV). Although these are still niche products on the domestic market, some of the leading manufacturers are trying to introduce electrified vehicles as a viable option for consumers. However, production prices, battery range, charging time, and charging infrastructure still comprise a challenge. Nonetheless, Nissan and Mitsubishi, most notably, have committed to pushing forward the electrified segment. Most electric cars sold in Japan are manufactured by Nissan.

E-fuel, electricity – or both?

Aside from adjusting engines to reduce emissions, electrofuels (e-fuels) are another promising way to make vehicles 'greener'. Japanese engineering and chemical companies have commenced research on such carbon-neutral fuels, storing the energy of renewable energies. These may provide higher energy density than batteries and utilize existing infrastructure, such as pipelines and gas stations. Moreover, they may enhance the environmental performance of new vehicles – whatever engine they run – and vehicles on the streets when mixed with gasoline. It could take decades to replace the whole Japanese car fleet with zero-emission vehicles. Hence, both will be needed to reach emission targets.