In Japan, foreign EV brands have faced a unique set of challenges and competition as they seek to establish a foothold in the market.

Currently, Tesla is the leading foreign EV brand in the Japanese market, with success due to its brand recognition and innovative technology. Other global EV brands, such as Nissan, Toyota, and Mitsubishi, have a larger market share. However, foreign brands such as BMW, Mercedes-Benz, and Porsche are starting to gain traction in the Japanese market.

Each brand also has its own unique selling points. Technological innovation and brand recognition are two factors that are critical for success in the Japanese EV market.

However, foreign EV brands are not without several challenges when it comes time to enter the Japanese market.

One of the greatest challenges in getting familiar with and adhering to Japanese regulations and standards is its strict regulations on vehicle size, emissions, and battery technology. Additionally, Japanese consumers tend to be highly discerning and tend to prioritize brand recognition, performance, and safety when purchasing vehicles.

Brand recognition is a key factor in the Japanese market, where consumers tend to be loyal to domestic brands such as Toyota and Nissan. Foreign brands need to leverage their global recognition and innovation to attract Japanese consumers.

Battery technology is also a crucial factor in the Japanese EV market, with strict regulations on battery technology and quality.

Technological innovation is also another critical factor in the Japanese EV market. Consumers are also expected to have cutting-edge technology in their cars, including connectivity, advanced safety features, and autonomous driving capabilities. Foreign brands need to ensure that they are offering the latest technology and features to compete with domestic brands.

A closer partnership of local companies with foreign brands in the Japanese market are:-

• Toyota and Tesla: In 2010, Toyota invested $50 million in Tesla and agreed to collaborate on electric vehicles. The partnership also resulted in the production of the RAV4EV, a battery-powered SUV used in Tesla’s technology and Toyota’s manufacturing expertise. The partnership also helped Tesla gain access to the Japanese market and learn from Toyota’s quality standards.
• Sony and Ericsson: In 2001, Sony and Ericsson formed a joint venture to combine their strengths in consumer electronics and telecommunications. The partnership created Sony Ericsson, a leading brand in mobile phones introduced innovative products such as the Walkman phone and the Cyber-shot phone. The partnership also enabled Sony and Ericsson sharing costs, risks, and resources in a highly competitive industry.
• Uniqlo and Toray: In 2006, a Japanese textile manufacturer, established a strategic alliance to develop and produce high-performance fabrics for Uniqlo’s clothing line. The partnership led to the creation of popular products such as Heat tech, a thermal fabric generating heat from body moisture, and Airism, a breathable fabric that keeps the wearer cool and comfortable. The partnership also gave Uniqlo a competitive edge in the global fashion market and enhancing Toray’s brand recognition.

According to Japan Intercultural consulting,

“the partnerships on paper, sounded like marriages made in heaven: pragmatic matches of foreign design capability and Japanese manufacturing capability, foreign products and Japanese ability to access their domestic market (or vice versa), foreign creativity and Japanese capital, or Japanese creativity and foreign management know-how.

Unfortunately, in many cases alliances between Japanese and foreign firms fail to meet their initial promise – they limp along or simply self-destruct. When alliances go awry, the wasted time and lost opportunity can be a significant cost.”

The reasons identified to fail such massively are due to:- “Issues of decision-making, strategic planning, coordination, authority and control are stumbling blocks for any strategic alliance.  When foreign and Japanese firms collaborate, these problems are often magnified by cultural differences in how non-Japanese and Japanese approach relationships and communications.”

“Japanese, for example, tend to avoid confrontation.  Rather than debate a topic and risk embarrassing their partner, they will smooth over the discussion.  As a result, important issues get buried and remain unaddressed.  In one case, a Japanese bank was frustrated with its American joint venture partner.  Unsure of how to broach differences without causing unwanted conflict, the bank simply turned its energies to other projects, leaving the American partner to wonder why the venture was being neglected.”

“Americans, for example, tend to take the “Lone Ranger” approach, making a decision on their own and then worrying later about getting others on the bandwagon.  This frustrates Japanese, who expect high degrees of internal coordination behind any corporate commitment.  Meanwhile, Japanese are careful to achieve consensus before finalizing any course of action, leading to a decision-making process that — from an American perspective — seems excruciatingly long and drawn out.”

Everything is not glorious as it looks like from outside.

The EV brands that can be a competitor in Japanese EV market:-

• Tesla is the most successful foreign EV brand in Japan, and it is the only non-Japanese brand in the top ten EV brands in terms of sales and market share. In 2020, Tesla sold around 2,000 Model 3 vehicles in Japan, accounting for approximately 0.7% of the overall EV market. Tesla has a strong brand reputation, a dedicated customer base, and cutting-edge technology that appeals to Japanese consumers.

• Hyundai, most promising foreign EV brand in Japan, since it is the second-largest EV brand in South Korea and one of the world’s leading EV brands. Hyundai just released its Kona Electric and Ioniq Electric vehicles in Japan, which provide excellent performance, extended range, and affordable pricing compared to other EV models. Hyundai also aims to launch a new EV platform and sub-brand, E-GMP and Ioniq, which will provide EV purchasers with more options and features.

• Volkswagen, the world’s largest manufacturer and one of Europe’s top EV companies, is the most ambitious foreign EV brand in Japan. Volkswagen has unveiled a plan to become the global leader in EVs by 2025, with Japan as a major market. Volkswagen plans to introduce ten new EV models in Japan by 2025, including its flagship ID series, which will be based on the company’s specialized EV platform known as MEB.

• BYD, the Chinese EV maker is the world’s second-largest EV producer, after Tesla. BYD has a strong presence in China, selling both passenger and commercial EVs, such as buses and trucks. BYD also exports its EVs to other markets, such as Europe, Latin America, and Southeast Asia.

The partnerships between foreign and local companies in the Japanese market allowed for increased access to resources, expertise, technology, and potential customers. The collaboration provided advantages for foreign brands and local companies, including overcoming cultural differences and regulatory hurdles and establishing brand loyalty.

Japan is known for its selective nature toward foreign involvement in its markets. However, partnerships are an effective tool for foreign brands to find success in the rapidly growing EV market.

Sources:- nippon, cleantechnica, BBC, economist, eetasia