Battery electric cars in Japan

BYD, China’s leading EV maker announced it will release three models for the Japanese market in 2023.

Meanwhile Toyota has only launched a single battery electric model in its domestic market (Toyota bZ4X SUV in 2022) while Nissan has launched two (Nissan Leaf in 2010, Nissan Ariya SUV in 2022). Both brands are still concentrating on gasoline-powered hybrids. The bZ4X is also offered as the Subaru Solterra, with some minor differences from the Toyota-badged model.

Germany’s VW is still holding back on its ID.3 and ID.4 models in Japan, perhaps because it can’t manufacture enough of them even for the European market. The VW group is only represented here in the battery electric market by its luxury brands Audi and Porsche.

Korea’s Hyundai launched the Ioniq 5 this spring, with the larger Ioniq 6 to follow next year.

It looks like 2023 will be an interesting year for BEVs in Japan which until now has been lagging far behind China, North America and Europe in the electric mobility transition.

On my last trip to the UK I was amazed by the number of BEVs of every brand and model I saw in London compared to Tokyo. In 2021, only 10,843 Nissan LEAF and another 8,610 imported electric cars were sold in Japan (about 60% of which were Tesla). That’s under 20,000 in total or 0.2 % of about 6.9 million new cars sold. The UK, with roughly half the population of Japan, bought 190,727 new electric cars the same year. About 1 in every 6 new cars registered in June 2022 in the UK was battery electric.

China recognized that BEVs are a strategic move. Taking the lead will allow them to leapfrog laggards like Toyota who are too wedded to their own past successes to make the necessary transition to a decarbonized future. And it’s not just about the cars: China also added more solar and wind power last year than the rest of the world combined to make it possible to charge these cars without burning fossil fuel. It has heavily invested in long distance HVDC transmission to shift renewable power over great distances while Japan’s grid still consists of separate grids in West Japan, East Japan and in Hokkaido with extremely limited interconnection capacity.

A couple of months ago Toyota upgraded its forecast for electric vehicle sales in 2030 from 2 million a year to 3.5 million a year, which is about one third of its current annual sales. That’s for almost a decade in the future! This suggests it doesn’t see a tipping point where battery electric overtakes internal combustion engines until later in the 2030s. It is hardly surprising then that during the recent G7 conference in Germany, Japan lobbied hard to remove a goal of at least 50% zero-emission vehicles for 2030 from the climate goals communique, presumably at the request of its car industry. Meanwhile 80 percent of new car sales in Norway are already battery electric.

When Toyota launched the bZ4X into the Japanese market this year, it announced a sales goal of only 5,000 units, roughly 1/10 of annual sales of the Toyota RAV4 that it most closely resembles and half of the annual volume of the 11 year old Nissan LEAF.

Furthermore, the bZ4X is not offered for sale to individual consumers who can only get it through leasing contracts. Supposedly this is “to eliminate customer concerns regarding battery performance, maintenance, and residual value.” This move paints long term performance of battery electric cars as a weak point when it isn’t (at least it isn’t with Tesla and other brands). By offering only leasing contracts, Toyota is casting shade on the technology.

At least due to the launch of the bZ4X Toyota will install DC fast chargers at its dealerships by 2025. Many Nissan and Mitsubishi dealers already have 30 kW DC chargers installed and a few have 50 kW chargers (more kW means a faster maximum charging rate) while most Toyota dealers still only offer 200 V AC charging, the most basic of all. The maximum charging rate with 200 V AC is a mere 6 kW. In countries with three phase AC, a 3 phase domestic AC charger that supports 11 kW will be offered by Toyota from the end of 2022. Until then, home charging in your garage or driveway will be limited to the lower rate.

DC charging of the bZ4X can go as fast as 150 kW, but available public DC chargers in Japan right now tend to be limited no more than 50 kW (most of them at car dealerships). For example, right now there are only 4 locations in Central Tokyo that offer 90 kW or more.

I think we will see change in the battery electric vehicle market Japan in the next few years, largely driven by foreign manufacturers introducing new models that Toyota, Nissan and other manufacturers will struggle to compete with. But they will have no choice but step up the pace of the zero-carbon transition if they don’t want to lose their existing market share here in Japan and in export markets. Otherwise Toyota may become the Nokia of the car industry.

Russia’s Gas Blackmail

Under Chancellor Angela Merkel, Germany’s dependence on Russia for gas supplies rose as high as 55% in 2020.

The first gas pipeline connecting Germany to the Soviet Union crossed the then Czechoslovak border at Waidhaus. The Transgas pipeline crossed the former Soviet (now Ukraine) border at Uzhhorod (Russian: Ushgorod). Via Ukraine it connects to Belarus and Russia. Even during the cold war it reliably supplied Germany with cheap Soviet gas.

After the breakup of the Soviet Union, its largest successor state Russia has had disputes with several of its ex-Soviet neigbours, including Poland, Ukraine and Belarus. These countries were earning transit fees from gas exported through their territory while also buying some Russian gas for their own use. As long as large consumers in the west were relying on the same pipelines as Russia’s immediate neighbours it wasn’t possible for Russia to halt gas supplies for example to Ukraine as a method of blackmail without jeopardizing long-term lucrative contracts with Western European customers.

That is why Russia came up with the plan to essentially duplicate the existing pipelines through these countries with a more costly set of new pipelines at the bottom of the Baltic sea that went directly from Russia to Germany, without crossing other countries.

The primary purpose of Nord Stream 1 (NS1) and Nord Stream 2 (NS2) was to destabilize the European countries hosting the existing transit pipelines and to expose to Russian energy blackmail. When Germany signed up for NS1 and later NS2, it clearly understood this motivation on Russia’s side but, with active lobbying by ex-Chancellor Gerhard Schröder, it chose to turn a blind eye to the implications. To Germany it was somebody else’s problem.

Well, the chickens have come home to roost: Now it is Germany that is being blackmailed and extorted by Russia while the Baltic states and Poland are already independent from Russian supplies as they have sought out supplies of LNG instead. Germany is still working on making that switch.

On June 13, Russia cut the flow of gas through NS1 by 60%. It blamed this on a turbine at the Russian compressor station in Vyborg (between Finland and St Petersburg) that needed to be refurbished in Canada. The Canadian government was reluctant to return it to Russia because of sanctions.

Eventually a deal was reached between Canada and Germany to return the turbine to Germany, which could then send it to Russia. However, that is not the real story: Germany’s economy minister Robert Habeck made clear that this is just Russia’s excuse and not the actual reason for cutting supplies. Germany can also receive gas from Russia via pipelines that terminate in Mallnow (Yamal-Europe pipeline) and Waidhaus (Transgas). Right now, no gas enters Germany through Mallnow and all the gas that enters via Waidhaus is fed via NS1 in the north, not Transgas in the east. As separate pipelines, Yamal and Transgas do not depend on the NS1 compressor station and turbine. On top of that there are also multiple turbines at Vyborg, which is why any single one being out of service is no cause for major disruption.

What Russia is doing is to intentionally throttle gas supplies to Germany to prevent it from refilling its gas storage sites. Germany is aiming to fill its storage sites to 90% or more of capacity by November 1 so that it can get through the winter without being subject to Russian blackmail. The less gas it receives now when demand is relatively low the more difficult that goal becomes.

In 2015, a year after Russia seized Crimea in Ukraine, a subsidiary of Russian gas monopoly Gazprom bought Germany’s biggest gas storage site in Rehden near the northern city of Bremen. Rather than fill the site before winter as is usual to insure against supply disruptions, Gazprom has kept this site nearly empty for the past year or so. Normally companies use cheap gas in Summer to fill storage sites to have sufficient gas available when demand is high. Without storage, if gas flow through the pipelines is stopped there will be no immediate alternative to keep homes warm and the economy running. Germany has now taken control of the storage site and had been steadily refilling it until the recent supply cuts.

Right now gas flow through NS1 is completely suspended for annual servicing but the big question is if supplies will resume after 10 days or if Russia will come up with a different excuse. It is playing mind games with Germany. If Germany can not fill its storage and Russia chooses to cut supplies during the winter then this will create political pressure on Germany to do whatever Putin wants it to do. It’s an effort designed to split the Western alliance and to end Germany’s support for Ukraine, which already is somewhat half-hearted compared to eastern NATO members or the United States.

Unlike the former Soviet Union, Russia’s highest priority with gas supplies is not to make money but to project imperial power. Gazprom is part of an empire, not a business. Russia has already sacrificed its position as a reliable energy supplier for political purposes, i.e. an attempt to restore Imperial Russia. There is no going back now. Even if Putin were to lose power, Europe will never again make itself dependent on Russian supplies. It will transition to alternative gas supplies and non-fossil energy as quickly as possible. Russia’s biggest cash cow will soon become worthless, long before gas wells would normally have run dry.

The transition to a non-fossil future may be difficult and expensive, but it is necessary because of climate change and Putin’s blackmail of several countries may end up greatly accelerating it. To get through the transition, Europe needs to work together to maximize alternatives to Russian oil and gas. It must not give in to blackmail.