Going electric

The push towards electric can be the subject of cooperation and agreement between Manila and Beijing.

In June 2010, about eight years ago, Silicon Valleybased automaker Tesla Motors made Japan its first Asian market for highway-capable electric cars by shipping a dozen right-hand drive roadsters to Yokohama. Earlier that year, Tesla also said it was venturing with Japan’s Panasonic to make electric vehicle fuel cells.

The Tesla move was in line with Tokyo’s push for widespread use of electric vehicles throughout Japan, in the hopes of cutting the country’s carbon emissions 25% by 2020. Almost eight years since, however, it doesn’t seem like “electric” has gained much traction in Japan. In late 2017, major carmaker Toyota said it was sticking to hybrid using hydrogen fuel-cell technology.

And then there is the concern put forth by Moody’s Investor Service “that the push toward alternative- fuel vehicles pose a credit challenge for multiple sectors in Japan, with the large auto sector and sectors such as steel and refining most affected.” Moody’s is a global credit-rating agency that maintains offices in Japan and other countries.

In a recent report, it quoted Moody’s Vice-President and Senior Credit Officer Motoki Yanase as saying, “Over the next decade, Japanese auto manufacturers and associated industries will make sizeable upfront investments in alternative-fuel vehicle technologies while bearing the risk that these vehicles may ultimately not be taken up by the market.”

“In addition to the direct impact on the auto, steel and refining sectors, electrification — and the resultant drop in gasoline consumption — will also reduce a meaningful source of government tax revenue, which funds road construction and public works programs,” he added.

Moody’s noted that “tightening emission requirements, changing consumer preferences amid growing concerns around climate change, and technological innovation were driving the push for alternative- fuel vehicles”. Thus, it estimates that battery electric vehicles and other alternative- fuel vehicles, such as hybrids, plug-in hybrids, and fuel- cell vehicles “may account for around 35% of new vehicle sales globally by 2030, compared to less than 5% in 2017.”

But for automakers, it said, the rising costs in research and development as well as capital investments needed for the shift to alternative-fuel vehicles could squeeze “already thin margins.” In addition, the entry of new carmakers will increase competition, while emerging technologies will take automakers beyond their core competencies and toward new business models.

It is perhaps no surprise then that almost eight years after its first delivery of electric cars to Japan, Tesla appears far from making a big dent in that market. One Nissan executive, however, sees the tipping point at 2025, when he believes that gas cars and electric cars may probably cost the same for consumers. Electric car sales may also be helped by the fact that Tesla’s partner, Japan’s Panasonic, is boosting its production of lithium-ion batteries for cars.

As for Tesla’s foray into China, it has suffered setbacks.

After announcing in June last year that it was in talks to build electric cars in Shanghai, Bloomberg reported just this February that “an agreement has