Japan’s GDP could fall by 14% due to slower shift towards EVs: Report

A new report by Climate Group has said that Japan, the second-largest car exporter across the world, would risk 14% fall in the GDP if it does not shift more swiftly towards producing EVs (electric vehicles).

The report highlights the status of auto sales in several regions wherein Japan lags behind major markets in China, the US, and Europe in terms of domestic electronic vehicle sales.

Japan has committed to some international climate targets and if the country fails to match these targets, the risk to Japan automotive industry and its economy will proliferate.

The East Asian country depends on auto manufacturing for nearly fifth of its export and if the nation does not boost its EV manufacturing it can risk losing half of its automotive export.

As a result, it will lead to a loss of 1.72 million jobs and $6 billion in auto profits by 2040 resulting in 14% drop in GDP.

Notably, the EU is looking forward to banning new ICE (internal combustion engine) vehicles by 2035, the United Kingdom by 2030, and China and the US require at least 50% of the new car sales to have plugs by 2035 and 2030 respectively.

But Japan has only been working on electrifying all new cars by mid-2030 which would primarily include HEVs. This will eventually make 100 percent of its local sales to be driven by gasoline with no ability to plug into the grid for cleaner electricity.

The key leaders of Japan’s automotive industry have shown resistance to transit from traditional vehicles to EVs. Furthermore, misinformation is widely spread across the country with a popular misconception of HEVs being more efficient then BEVs. Japan has quite conservative business practice, so change comes slowly.

However, the EV automotive industry of Japan is not all doomed. Japan does have an important lead on patents related to electrification, though these are mainly associated with hybrid technology rather than BEVs.

Some early leaders in Japan's EV industry have also suggested several policy proposals for developing Japan’s EV industry.

Source Credit: https://electrek.co/2022/05/11/japan-could-lose-14-gdp-and-millions-of-jobs-by-stalling-on-electric-cars-report/