Japan EV Profile: Power Supply Risk Clouds EV Outlook
|Fitch Solutions Sector Intelligence
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Japan EV Profile: Power Supply Risk Clouds EV Outlook
Key View: We highlight that Japan’s power market risks a supply and demand mismatch, with hotter weather threatening to increase power consumption amid power generation bottlenecks. Stronger reliance on conventional thermal power generation, compared to other power types, is leaving Japan vulnerable to power shortages in the face of high gas prices and stunted natural gas supply from Russia. This could see some resistance from the government to further support EV sales as it will increase the strain on the country's power grid.
Electric Vehicle Market - Historical Data And Forecasts (United States 2020-2031)
|Indicator ||2020 ||2021e ||2022f ||2023f ||2024f ||2025f ||2026f ||2027f ||2028f ||2029f ||2030f ||2031f |
|Passenger electric vehicle sales, units ||29,254 ||34,371 ||68,904 ||75,277 ||85,601 ||97,513 ||107,322 ||116,131 ||123,363 ||129,294 ||141,997 ||192,297 |
|Passenger electric vehicle sales, % y-o-y ||-24.8 ||17.5 ||100.5 ||9.2 ||13.7 ||13.9 ||10.1 ||8.2 ||6.2 ||4.8 ||9.8 ||35.4 |
|Passenger battery electric vehicle sales, units ||14,574 ||16,910 ||33,243 ||35,467 ||39,599 ||44,371 ||48,109 ||51,375 ||53,939 ||55,948 ||60,882 ||81,781 |
|Passenger battery electric vehicle sales, % y-o-y ||-31.5 ||16.0 ||96.6 ||6.7 ||11.7 ||12.1 ||8.4 ||6.8 ||5.0 ||3.7 ||8.8 ||34.3 |
|Passenger plug-in hybrid electric vehicle sales, units ||14,680 ||17,461 ||35,661 ||39,810 ||46,002 ||53,142 ||59,213 ||64,756 ||69,424 ||73,346 ||81,115 ||110,516 |
|Passenger plug-in hybrid electric vehicle sales, % y-o-y ||-16.6 ||18.9 ||104.2 ||11.6 ||15.6 ||15.5 ||11.4 ||9.4 ||7.2 ||5.6 ||10.6 ||36.2 |
|e/f = Fitch Solutions estimate/forecast. Source: JAMA, Fitch Solutions |Latest Developments And Key Drivers
- Japan has been a laggard in the Asia region when it comes to electric vehicle (EV) adoption. We estimate that in 2021, EV sales as a % of total vehicle sales remained below 1.0% with an estimated annual sales volume of just under 35,000 units.
- We forecast that EV sales in Japan will accelerate in 2022 as Toyota Motor launches its bZ4X EV and the Chinese Wuling Hongguang Mini EV and Hyundai EVs goes on sale in Japan. We forecast that Japan's EV sales will expand by 100.5% in 2022 to reach an annual sales volume of just over just below 69,000 units, representing an EV penetration rate of 1.6%.
- We believe that the development of international hydrogen supply chains will be crucial to support the growth of the green hydrogen industry in Asia. While Asia as a region is set to see robust growth in both demand and supply for green hydrogen over the coming decades, production will be concentrated largely in areas distant from key demand centers. Several developed markets in Asia, such as Japan and South Korea, are keen to develop international hydrogen supply chains, with green hydrogen produced in cheaper locations and then imported into their domestic markets, as part of building domestic hydrogen economies and consumption in new sectors. For example, Japan is looking toward the import of (green) hydrogen as a way to diversify against its dependency on LNG imports and boost energy security.
- Japan-based logistics companies and delivery services are also increasingly adopting small electric vans to cut emissions. SBS holdings (a large local logistics company) plans to eventually have a fleet of some 10,000 commercial EV vans that it can use for e-commerce deliveries which offers further upside risk to our EV forecast.
- In July 2022, the Chinese EV brand BYD announced that it will launch three EV models in Japan starting in 2023. This is significant because traditionally Chinese auto brands did not perform well in the Japanese market and the local market remains dominated by local auto brands. That said, we expect this to boost Japanese EV sales in 2023. We forecast EV sales to expand by 9.3% in 2023 with strong upside risk depending on how quickly the Japanese consumer, and fleet operators, take to the new market entrant.
- We highlight that Japan’s power market risks a supply and demand mismatch, with hotter weather threatening to increase power consumption amid power generation bottlenecks. Stronger reliance on conventional thermal power generation, compared to other power types, is leaving Japan vulnerable to power shortages in the face of high gas prices and stunted natural gas supply from Russia. This could see some resistance from the government to further support EV sales as it will increase the strain on the country's power grid.
Without Significant Government Support, EV Adoption Will Be Slow
Japan - EV Fleet By Type & EV Fleet Penetration
e/f = Fitch Solutions estimate/forecast. Source: JAMA, Fitch Solutions
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