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January 20, 2022

Chinese EV Carmakers Are Entering The Quality-Driven Japanese Market

Chinese carmakers are finally making it into Japan through an unlikely route: commercial vehicles. Thanks to a booming online commerce in Japan, Chinese-made EVs such as those from Dongfeng Motor Group and Guangxi Automobile Group Co. have made their way into the fleets of logistics companies there.

With Japanese carmakers saying it’s “impossible to lower prices” logistics companies such as SBS Holdings and Sagawa Express had to look for cheaper alternatives; that happens to be to the tune of 2,000 EV trucks for the former, and 7,200 EV minivans for the latter. If all goes well, SBS Holdings plans to expand their fleet to about 10,000 Chinese-made EVs.

While there are still questions on how Chinese-made vehicles will perform three or four years down the road, this isn’t seen as a problem for these logistics companies. In the here and now, they work fine.

The penetration of the Japanese market by Chinese-made EVs is seen by the latter as an important step to finally legitimize their reliability and durability. This is especially so since Japan is known as a “quality-oriented market.”

It also should serve as a wakeup call to Japanese car manufacturers. Thanks in part to Chinese government policies as well as creating a whole manufacturing infrastructure surrounding EVs, EV makers there are able to produce electric vehicles at shockingly low prices—as low as 20 percent of what Europeans, on the average, pay for.

Industry analysts fear that if Japan does nothing, its automotive industry could face a similar crisis that befell its home appliances sector. After dominating the world in the 1980s and 1990s, brands like Panasonic, Sony, Toshiba, and Sharp lost out to cheaper Chinese alternatives.

Though Japanese commercial vehicle manufacturers are trying to fight back, they have to hit the ground running. With the Japanese government pledging to cut emissions by 50 percent in 2030 compared to 2013 levels, 90 percent of vehicles sold there by that year need to be battery-electric ones.

The commitment to go green, however, must be balanced by companies with profitability in order to keep their shareholders happy. Ultimately, this may make it hard for them to be both profitable and patriotic at the same time. If Japanese automakers don’t do anything, China will take over the industry.

With reporting from Bloomberg.

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