The Japanese Government's Bet Against Tesla

Analyzing the top news stories across the web
June 27 2014 12:57 PM

The Japanese Government's Bet Against Tesla

Was7191036
Can Tesla take off in Japan? Seems like its government might not want it to.

Photo by Stan Honda/AFP/Getty Images

This post first appeared in Business Insider.

The Japanese government has announced measures that could indirectly pressure Tesla sales in Japan. 

Advertisement

On Tuesday, Japanese Prime Minister Shinzo Abe said his administration would begin providing additional support to the country's fuel-cell vehicle industry, as part of his overall growth plan. It's something of an unusual move, given that Japan is the world's second-largest market for plug-in vehicles.  

We recently wrote about the burgeoning civil war in the renewable fuels world between charge-batteries and fuel cells. Tesla CEO Elon Musk called them "fool cells" at the company's annual meeting earlier this month. This announcement is the latest chapter in that struggle, and it coincides with news out of Toyota that it would be releasing a Camry-sized hydrogen fuel cell-powered car in Japan for next year.* 

The new sedan will be priced at $69,000 (or ¥7 million)—exactly $1,000 lower than the price of a Tesla Model S. That is unlikely to have been a coincidence, according to Lisa Jerram, senior research analyst at Navigant Research. "It does seem as though they're attempting to compete in that category," she told Business Insider, noting that the $69,000 price tag is actually lower than the $100,000 initially floated. 

Japan's per-capita penetration of electric vehicles matches the U.S.'s, according to HybridCar's Jeff Cobb, and last year, Tesla was the only U.S. automaker to show at the Tokyo's Motor Show. 

Despite this seeming opportunity for the California firm, plug-ins may soon face pricing pressure in Japan. Jarrem said the country has been ramping up fuel-cell production for its electric generation sector in the wake of the Fukushima disaster. The size of Abe's subsidies for fuel-cell vehicles weren't announced, but the goal is to have the sector generating 1 trillion yen ($9.8 billion) in revenue by 2030. To do so, he's set a target of bringing fuel-cell car prices down to $20,000 by 2025. 

Meanwhile, in a note this week, Morgan Stanley's Adam Jonas confirmed that half the auto industry seems to be abandoning electric vehicles in favor of fuel-cell vehicles, the result of chicken-and-egg-esque forces of flagging demand and a half-hearted commitment to building out the necessary plug-in infrastructure. The broader goal, he says, is to get governments to respond accordingly.

"We see the [fuel-cell vehicle] push as a diversionary tactic to slow down, if not completely reset, a regulatory framework scripted to support mass adoption of EVs that don’t appear ready for prime time," he wrote. 

It seems to be working in Japan.

*Correction, June 30, 2014: This post originally misstated that Toyota will be releasing a Camry-sized hydrogen fuel cell. It will be releasing a Camry-sized hydrogen fuel cell-powered car.”

Rob Wile is a reporter at Business Insider. Follow him on Twitter.

TODAY IN SLATE

Foreigners

The World’s Politest Protesters

The Occupy Central demonstrators are courteous. That’s actually what makes them so dangerous.

The Religious Right Is Not Happy With Republicans  

The XX Factor
Oct. 1 2014 4:58 PM The Religious Right Is Not Happy With Republicans  

How Did the Royals Win Despite Bunting So Many Times? Bunting Is a Terrible Strategy.

Catacombs Where You Can Stroll Down Hallways Lined With Corpses

Homeland Is Good Again! For Now.

Crime

Operation Backbone

How White Boy Rick, a legendary Detroit cocaine dealer, helped the FBI uncover brazen police corruption.

Music

How Even an Old Hipster Can Age Gracefully

On their new albums, Leonard Cohen, Robert Plant, and Loudon Wainwright III show three ways.

The One Fact About Ebola That Should Calm You: It Spreads Slowly

Piper Kerman on Why She Dressed Like a Hitchcock Heroine for Her Prison Sentencing

  News & Politics
Foreigners
Oct. 1 2014 6:41 PM The World’s Politest Protesters The Occupy Central demonstrators are courteous. That’s actually what makes them so dangerous.
  Business
Moneybox
Oct. 1 2014 2:16 PM Wall Street Tackles Chat Services, Shies Away From Diversity Issues 
  Life
Outward
Oct. 1 2014 6:02 PM Facebook Relaxes Its “Real Name” Policy; Drag Queens Celebrate
  Double X
The XX Factor
Oct. 1 2014 5:11 PM Celebrity Feminist Identification Has Reached Peak Meaninglessness
  Slate Plus
Behind the Scenes
Oct. 1 2014 3:24 PM Revelry (and Business) at Mohonk Photos and highlights from Slate’s annual retreat.
  Arts
Brow Beat
Oct. 1 2014 6:39 PM Spoiler Special: Transparent
  Technology
Future Tense
Oct. 1 2014 6:59 PM EU’s Next Digital Commissioner Thinks Keeping Nude Celeb Photos in the Cloud Is “Stupid”
  Health & Science
Science
Oct. 1 2014 4:03 PM Does the Earth Really Have a “Hum”? Yes, but probably not the one you’re thinking.
  Sports
Sports Nut
Oct. 1 2014 5:19 PM Bunt-a-Palooza! How bad was the Kansas City Royals’ bunt-all-the-time strategy in the American League wild-card game?