Association, Inc.

Issue No. 4, 2010

Next-generation vehicles strategy in Japan

Earlier this year, the Japanese Ministry of Economy, Trade and Industry (METI) announced its "Next-Generation Vehicle Strategy 2010", for medium to long-term actions for the automotive and related industries.

The strategy comes at a time when there is an obvious increasing urgency to deal with global environmental challenges such as climate change or the limited supply of natural resources.  It shows that the automotive industry must work to further improve fuel efficiency, reduce CO2 emissions, diversify fuel sources and introduce next-generation vehicles*1 to the market on a full-scale basis.

Several trends can be identified against this background.  First, the global market for next-generation vehicles is already expanding rapidly so as to meet the above challenges.  In the US, a market where long-distance travel by large vehicles is the norm, there is an ongoing drive for automotive fuel efficiency.  In Japan and the EU, where smaller cars are preferred, eco-friendly cars are in high demand. Meanwhile, in emerging markets such as China and India, small, low-priced cars are dominant.

Second, while internal combustion vehicles are expected to remain dominant in the short to medium-term, international competition between hybrid, clean diesel, and fully electric vehicles has clearly intensified recently.  Similarly, the storage battery sector is likely to see much more heated competition, while the development of electric vehicles and battery technology will drive growth for the industry in all its markets.

Under METI’s Next-Generation Vehicle Strategy, their current projections suggest that next-generation vehicles would make up fewer than 20% of new passenger car sales in 2020 and 30 to 40% in 2030 with private sector efforts only.  Meanwhile, Government targets based on implementation of effective incentives aim for 20 to 50% by 2020 and 50 to 70% in 2030.  Based on the fact that the Japanese market share of next-generation vehicles accounted for only 2 to 3% in 2008, JAMA views the government target ambitious and difficult to achieve, and believes that strong political support under the responsibility of the Government is essential for achieving this target.

Nonetheless, although the next-generation vehicles powered by electricity, hydrogen and other alternative energies are expected to boost fuel efficiency and reduce CO2 emissions by a significant margin, improving the efficiency of the internal combustion engine remains critically important, especially given existing obstacles to technology development, cost optimisation and infrastructure consolidation.

In terms of more specific goals, research and development on battery technologies will focus on improving the performance of lithium-ion batteries, developing successors to this technology as well as creating an environment for secondary use of batteries.

The strategy will also involve the development of the necessary infrastructure to support next-generation vehicles, predominantly in electric/plug-in hybrid vehicle uptake.  Meanwhile, other priorities include establishing international standards for battery performance and safety evaluation methods, as well as for charging connectors and systems, and enhancing public-private support for standardisation.

Japanese auto makers have been very successful worldwide, due to their advanced technological innovation, and have thus helped drive international growth and employment, notably in Europe where in 2009 JAMA members employed 136,000 people and made cumulative investments of €21.49 billion.  The Next-Generation Vehicle Strategy will help in maintaining this momentum and the leading role of JAMA members in the clean and energy-efficient vehicle sector.

Lastly, JAMA strongly supports an integrated approach to CO2 emission reduction that includes not only vehicle-oriented measures but also complementary actions on traffic flows, diversification of fuels and promotion of eco-driving.  JAMA encourages regions and countries around the world to adopt this same approach.

*1 Includes hybrid vehicles(HV), electric vehicles(EV), plug-in hybrid vehicles(PHEV), fuel cell vehicles(FCV), clean diesel vehicles(CDV) and compressed natural gas vehicles(CNGV) and others