Driving Together: Japan's Collaborative Path to Clean Mobility

January 2024

In an era of worsening climate disasters, governments and companies alike recognize the need to slash greenhouse gas emissions. The auto sector is no exception: decarbonizing cars will be crucial to achieving “net zero” emissions by 2050, a goal adopted by a growing number of countries including Japan.

Looking at the global electric vehicle (EV) sales figures for 2022, Japan's market share is just a modest 1%. Hybrid gasoline-electric vehicles—which Japan pioneered in the 1990s—has been extremely popular, accounting for about half of all new sales. However, cars powered by batteries alone are still rare.

Yet a closer look reveals that Japanese technology is helping to drive automotive decarbonization worldwide. And new innovations in the pipeline promise to take those efforts to a whole new level.

Decarbonization in Japan’s automobile sector began in 1997 when Toyota released the Prius, the first commercial hybrid car. By adding batteries alongside gas tanks, the Prius contributed to a significant decline in CO2 emissions. The latest plug-in hybrids feature all-electric modes and can travel 100km on just a few liters of fuel.

Japan’s auto industry has continued to develop the technologies that underpin vehicle electrification, such as batteries, motors, and inverters. Nissan launched the world’s first mass-produced EV, the Leaf, in 2010, and became the first car company to reach 400,000 EV sales in 2019.

The biggest challenge in vehicle electrification is energy storage, and it is here that Japan is playing a particularly vital role. Rechargeable lithium-ion batteries are a born-in-Japan technology: their inventor, Dr. Akira Yoshino, won the Nobel Prize in 2019 for his work. The devices are now manufactured around the world, and Panasonic, a Japanese company, remains one of the top suppliers of rechargeable batteries for electric cars.

More innovations are on the way. Toyota announced in June that they are planning to commercialize solid-state batteries, the next evolution of lithium batteries, as early as 2027. Estimates show that an EV equipped with a solid-state battery can achieve a range of 1,200 kilometers and be charged in less than 10 minutes. This would eliminate consumer concerns about travel distance and recharging time, opening the door to the sweeping popularization of EVs.

The Japanese government has positioned the decarbonization of automobiles as an important pillar of its growth strategy. It is supporting efforts to grow the domestic storage battery-manufacturing base to a production capacity of 150 GWh per year, and the global capacity of Japanese producers to 600 GWh per year by 2030. In addition, it is working to capture the next-generation storage battery market, including all-solid-state batteries.

Moreover, Japan’s automobile decarbonization technology goes beyond electrification, as research into hydrogen fuel and biofuel continues to progress. In 2014, Toyota released the Mirai, a fuel cell vehicle that generates electricity from hydrogen, and the technology has been used by public buses in Tokyo since 2017. Practical applications of e-fuels—synthetic fuels created by fusing hydrogen and carbon dioxide—are being developed by automakers, oil companies, and universities.

Mazda is collaborating with Euglena, a bio-venture company that promotes research and development of synthetic fuel production using microorganisms. Mazda has deepened its relationship with Euglena by entering and finishing a race in a vehicle supplied with biodiesel fuel by the bio-venture, and the carmaker also announced financial support for Euglena's biofuel plant project.

Major automakers are not alone in the trend toward decarbonizing the mobility industry. In addition to the bio-ventures mentioned above, start-ups such as HW Electro and FOMM are also innovating in the Japanese mobility market.

These mobility startups see commercial opportunities in the market for small EVs, a business that the giants have not yet developed. FOMM brought to market a small EV that, as the name suggests, meets “first one mile mobility” needs, while HWE brought a commercial EV (EV truck) to market. Both companies have been gaining recognition in Japan, exhibiting at the recent Japan Mobility Show (formerly the Tokyo Motor Show).

“As a start-up, we’re not bound to long-established supply chains, so we can bring fresh thinking to the industry,” says Hideo Tsurumaki, president of FOMM.

He adds that, with the decline in the yen, Japan is a viable place to manufacture for export.

“About 97 percent of companies in Japan are small to medium-sized enterprises,” he notes. “They have strong technical capabilities, and collaboration among these kinds of companies could extent the potential of Japanese manufacturing globally."

Global collaboration is an increasingly important part of the mix. In October, Houston-based e-fuel producer HIF Global and Japanese oil refiner Eneos Holdings said they would explore ways to cooperate in e-fuels production and distribution, HIF’s second such partnership in Japanese. Singapore’s SWAT Mobility is providing regional Japanese municipalities with mobility-as-a-service (MaaS) solutions such as app-based bus-share systems, helping operators increase efficiency and cope with a shortage of drivers. Many local governments are facing similar challenges, and the need for MaaS-based solutions is expected to increase.

For decades, Japan has been delivering breakthroughs to make cars cleaner. That commitment endures today, with progress in fields ranging from electrification and hydrogen power to next-generation biofuels and software.

It is a collaborative and increasingly borderless effort, one that brings together innovators from around the world in pursuit of a common goal. In Japan, the cooperation between the government and local and international businesses is accelerating decarbonizing the world’s auto industry.