CEO of Japanese Electric Vehicle Startup Aims to Pump Life into Sluggish Market
“It’s about how much of the market share we can capture. In the Japanese market, there are about 2.5 MILLION COMPACT CARS. We’re aiming for a 10% share.”
ITH ITS BUDGET ELECTRIC CARS targeting rural dwellers, senior citizens and new drivers, Tokyo startup Apatech Motors wants to change perceptions not just about electric vehicles (EV), but about cars in general. Since the company’s launch in May of 2022, chief executive officer Feng Sun and his team have been on a mission to spread the idea that cars used mostly for short distances, or only occasionally, do not need to be fancy or pricey.
The biggest hurdle – also what Sun refers to as the “blue ocean” of opportunity – is that Japan, with a penetration of just three percent, lags behind players in the global EV market. As a former fund manager, Sun was jolted into entrepreneurship during the pandemic that caused him to reexamine how he could contribute to solving issues such as sustainability and post-disaster recovery.
“In the process, I turned my attention to the EV industry, which I had been interested in for a while. Additionally, with the expected restart of nuclear power plants, the cost of electricity is predicted to become even cheaper,” Sun said.
200,000 Cars a Year from New Factory
APATECH MOTORS NOW USES ORIGINAL equipment manufacturing (OEM) to design cars made in Chinese factories according to Japanese requirements as well as user needs. Pet owners and last mile delivery services are part of the specialist groups the company is targeting. So far, the company has put to market 50 of its 400-strong fleet and has undertaken a feverish drive to spread awareness and acceptance of EVS across the country.
This year, Apatech Motors will open its own factory in Fukushima prefecture, which suffered immense damage in the 2011 Tohoku earthquake and tsunami and was also the site of a nuclear accident. Apatech Motors has named its current series of cars ‘Ohkuma’, after the town that was completely evacuated following the accident. Apatech Motors’ new factory is expected to have an annual production capacity of 200,000 cars per year.
“It’s about how much of the market share we can capture. In the Japanese market, there are about 2.5 million compact cars. We’re aiming for a 10% share. For example, our goal for this year is to reach about 10,000 units. We’ve taken a good look at trends in previous fiscal years, and we are inviting more and more investors to partner with us,” Sun said.
Introducing EVS Through Car Sharing and Subscriptions
IN ADDITION TO THE SALE OF EVS, Apatech Motors’ offerings include car sharing and subscription services. Unlike some existing share models, where the company owns the cars, it is car owners who will be encouraged to lend their cars to others when they are traveling, for example. Some of the benefits include offsetting high maintenance costs such as parking and insurance fees.
Subscription-based services have found success among Japanese consumers. Apatech Motors wants to use subscriptions to introduce EVS to beginners uncertain about product quality and give them a chance to try out vehicles with the latest features. Eventually, it hopes to convert these users into owners. Currently, the company’s compact model rents for about $350 monthly, and its bigger, commercial model $700.
“We don’t see ourselves in direct competition with giant players like Toyota and Honda. If they represent the JAL (Japan Airlines) and ANA (All Nippon Airways) of the automotive industry, we see ourselves as a LCC (low-cost carrier), approaching challenges in Japanese consumer mobility from a different perspective. We aim to rapidly popularize small EVS and as consumers
become more familiar with EVS, we anticipate them purchasing larger and more feature-rich EVS from major brands,” Sun said. Innovation Needed to Combat Slow Infrastructural Development THE JAPANESE GOVERNMENT HAS COMmitted to net zero carbon emissions by 2050, alongside a goal to have all new car purchases by 2035 being EVS or hybrids. The country has also provided subsidies and incentives for buyers and manufacturers. However, Sun is concerned that the pace of infrastructural development, such as increasing charging locations, needs to be accelerated. Overcoming these challenges requires ingenuity and innovative partnerships.
“For example, in Japan, there are vending machines nationwide, and we are exploring the idea of using them as charging stations. If, for instance, you buy a drink, you can charge your vehicle for an hour. We have been discussing this with Japanese beverage manufacturers, considering there are approximately five million vending machines nearly covering the country,” Sun said.
Part of Sun’s motivation comes from an interest in fixing the imbalance of Japanese companies in his native China versus the number of Chinese companies in Japan. Sun says over the past two to three decades, more than 30,000 Japanese companies have set up shop in China. He wants to use Apatech Motors to bring advanced Chinese technology and knowhow to the Japanese automotive industry, leading to increased overall competitiveness. China is among the top producers and users of EVS. Apatech Motors is also Sun’s way of repaying the kindness of dozens of Japanese people who have supported him since he first moved to the country almost 25 years ago. Electric Car Use Gaining Popularity THERE IS NO DENYING THAT WHAT lies ahead is an uphill task. Japan has traditionally been one of the top gasoline car producers in the world. Electric or not, many young people in urban centers have given up using cars altogether. Overall, Japanese consumers have been remarkably slow to warm up to using electric cars. Sun likens this to the adoption of motor cars over carriages in the early 1900s– slow, steady and sure. His chief risk officer Tomohiro Noda agrees.
“One concern that many people have is whether EVS are reliable in case of any trouble. We are establishing maintenance and after-sales systems to dispel these concerns. As more people start driving our cars, and the network for such services is established, people will feel more comfortable. People are also gradually changing how they use EVS. They may consider using fuel cell or hybrid vehicles for longer distances. The idea is to change lifestyles, making use of these convenient options. We have no doubts about the widespread adoption of EVS,” Noda said.