Ban on gasoline-only vehicles could jump-start Japan's EV bid

TOKYO — Toyota made "hybrid" a household word with the Prius. Honda was the first to bring the electric-gasoline mashup technology stateside, with its first-generation two-seat Insight.

And Nissan and Mitsubishi were industry pioneers in mass-producing full-electric vehicles.

But despite their early advances into electrification, Japanese automakers look like laggards today. The hybrid systems favored by Toyota and Honda seem somewhat yesterday in an era abuzz over a worldwide wave of full EVs. And Nissan and Mitsubishi long ago saw competitors pass them by in battery-electrics.

But now a dramatic policy shift by Japan's government could make the industry newly competitive.

Under an initiative floated this month, Japan's powerful Ministry of Economy, Trade and Industry is proposing phasing out sales of new gasoline-powered vehicles by the mid-2030s. The plan, first reported by national broadcaster NHK, is expected to be adopted by year end.

The policy, which would still allow for sales of hybrids, is being advanced as a steppingstone toward the bigger target of turning the island nation into a net-zero emitter of greenhouse gases by 2050. That goal was unveiled this year by Japan's newly elected prime minister, Yoshihide Suga, who took office in September.

Under the framework, electrified vehicles would have to account for a specified percentage of an automaker's product mix, Japan's Nikkei newspaper reported separately. Companies that can't make that happen would have to buy emissions credits from competitors in a carbon-trading arrangement.

The new directive will reverberate through Japan's auto industry.

On one hand, it could be a boon to hybrid leaders such as Toyota Motor Corp. and help jump-start the moribund full-electric vehicle ambitions of Nissan Motor Co.

But an effective ban on new vehicles powered solely by combustion could also trigger a shakeout among smaller players such as Subaru, Mazda and Suzuki, which have smaller R&D budgets and have been slow to go electric.

For those three players, a wholesale pivot to electrification could stoke tighter cooperation with giants such as Toyota.

At the same time, similar pressure likely will mount on Mitsubishi Motors Corp. to tighten its dependence on Nissan, which holds a controlling 34 percent stake in the smaller Japanese carmaker.

Honda Motor Co., meanwhile, is partnering with General Motors on electric and fuel cell technology in a sign it also lacks the deep pockets to completely go it alone.

The ban could also spell big changes for some iconic Japanese models that bank on their engine growl, such as the Nissan GT-R and the revived Toyota Supra. Not to mention a swath of the global supplier sector that is wrapped up in making parts for engines and transmissions.

The proposed 15-year phaseout would give Japanese automakers time to adjust, over two or three product cycles. But if they are slow to make the transformation, it could also open the Japan market to import hopefuls such as GM or Volkswagen, which are more aggressively diving into EVs and should have well-established all-electric lineups by the mid-2030s.

Conversely, Japan's lofty green goals could induce its automakers to step it up in the global EV race.

Other countries, including China, the U.K. and France, are moving ahead with their own restrictions on internal combustion engines. And California aims to ban their sale in 2035.

A new mandate from Tokyo may not only force Japanese automakers into the EV market at home but make them more competitive on a global playing field that's shifting in that direction.

The world's third-largest auto market is already largely electrified. About 36 percent of all vehicles sold in Japan have some form of battery power.

But conventional hybrids rule here. They accounted for 98 percent of the total green car pool, or nearly 640,000 vehicles, from January to June of this year.

Full electrics, by contrast, racked sales of just 6,755 over that period.

But Japanese automakers aren't standing still. Even small players saw the writing on the wall about the need for cleaner cars and were transitioning to electrified lineups.

Toyota, for instance, wants to be selling 5.5 million electrified vehicles a year in 2025. Toyota partner Subaru plans to derive 40 percent of its global sales from them in 2030. And in the same year, Mazda aims to deploy some form of electrification in all its vehicles, including mild hybrids.

Nissan, which could become the only Japanese carmaker selling an EV at home following Mitsubishi's decision to stop production of the all-electric i-MiEV minicar, has staggered targets.

In 2023, it wants 60 percent of its domestic Japan sales to be electrified, 50 percent of its Europe sales and 23 percent of its China sales. Nissan hasn't yet offered a goal for the U.S., where it is less bullish about EV demand.

Mitsubishi, meanwhile, targets electrified vehicles for half its worldwide sales in 2030.

And Honda, the country's No. 3 automaker, plans to derive two-thirds of its global volume from standard hybrids, plug-ins, battery-electrics and fuel cell vehicles by 2030.

Here are the individual plans and outlooks for Japan's major automakers.

Toyota may be the hybrid king, but it played conservative skeptic when it came to full electrics. That began to change last year, when Toyota amped up its EV vision by unveiling a line of full-electric concept vehicles that preview 10 EVs it now wants to launch worldwide in the early 2020s.

The offerings include an electric crossover that Toyota is codeveloping with Subaru and an EV for China that bowed this year. At the time, Toyota also said it would introduce an ultracompact two-seat EV for Japan in 2020 with a range of 62 miles, but that still hasn't arrived.

Toyota's envisioned EV lineup covers six body types, all with a distinctive design. The vehicles have long wheelbases, slitlike headlights and camera-based mirrors. They include a large SUV, a medium SUV, a medium crossover, a medium minivan, a medium sedan and the compact.

Toyota is working with a dedicated all-electric vehicle platform, called e-TNGA, a play on the company's new-generation Toyota New Global Architecture modular platform. It is an outgrowth of EV C.A. Spirit Corp., a nine-company consortium led by Toyota to develop and share components for electric vehicles. Other members include Subaru, Mazda, Suzuki and Daihatsu.

In that framework, Toyota will work with Suzuki and Daihatsu to jointly develop a compact EV.

But Toyota also has one other weapon in its arsenal of electrification: hydrogen fuel cell technology. The company is one the world's biggest proponents of hydrogen in a shrinking field of carmakers pursuing the technology. It pushed ahead with its vision this month by unveiling the next-generation Mirai hydrogen fuel cell sedan. The svelte, sexy redesign dumps the frumpy looks of the first-generation Mirai and makes improvements throughout in the water-emitting drivetrain.

The Mirai will help Toyota meet emissions standards in Japan and the U.S. But under Japan's proposal, Toyota will get the biggest boost from its extensive and popular line of conventional hybrids. Toyota now installs its hybrid drivetrain on 28 nameplates from Toyota and Lexus, from the Toyota Corolla to the Lexus LS and even the Century limousine.

There also is Toyota's JPN Taxi, the bulbous vehicle it developed to shuttle people during the 2020 Tokyo Summer Olympics, before the games were postponed.

In 2019, Toyota sold 638,557 electrified vehicles in Japan, about 40 percent of its domestic total.

Subaru, one of the small Japanese players sheltering under Toyota's wing, plans to lean on Toyota for upcoming hybrid and full-electric technology. The all-wheel-drive specialist is jointly developing an all-electric platform for midsize and large vehicles. And an electric crossover arriving in the early 2020s will be sold separately by Subaru and Toyota.

The main target of Subaru's electric crossover will be the U.S., where CEO Tomomi Nakamura has told Automotive News it will be positioned as a compliance car for California emissions.

But Subaru has doubts about real demand for electrified vehicles in the U.S., which accounts for about two-thirds of its global sales. Nakamura notes that Subaru sells about 13,000 Crosstreks a month stateside, of which just 300 are hybrids.

"For the U.S. market, we're not sure how rapidly the EV market will grow. Based on that, we'll have to think about our strategy and how we add electrified vehicles to the lineup," he said.

In hyrbrid-crazy Japan, Subaru does much better. Here it sells electrified versions of the Forester, Impreza and XV, the local market's name for the Crosstrek. In Japan, Subaru sold 9,800 hybrids through September, accounting for about a third of its overall sales.

A hybrid from the Toyota partnership will arrive in the mid-2020s. In the first half of the 2030s, Subaru wants to apply some form of electrification to all its vehicles worldwide.

Mazda is another carmaker teaming with Toyota, both in terms of capital cross-holdings and electric vehicle development. But Mazda is pursuing a multipronged approach to electrification. In addition to full electrics, its push includes mild hybrids and rotary engine range extenders.

All told, Mazda wants every nameplate to be electrified by 2030. But even by that year, full-electric vehicles and range extenders will account for only 5 percent of Mazda's lineup. In Mazda's current product plan, the balance will pair combustion engines with some form of electrification.

Mazda is already rolling out the mild hybrids, as seen in the engine-assist technology added to its latest Skyactiv-X gasoline engine for vehicles in Japan and Europe. But the Hiroshima carmaker has another platform designed to accommodate a wider range of electrified layouts. It debuted in the MX-30, a barrel-bodied compact crossover shown at the 2019 Tokyo Motor Show. The MX-30 carried an all-electric drivetrain for Europe and mild-hybrid configuration for Japan that paired a 5.1-kilowatt assist motor to a gasoline engine.

Mazda also plans to revive its trademark rotary engine as a range extender for an electric motor. The rotary is well suited to the task because it is compact, powerful and quiet, Mazda says.

Speculation mounted that the rotary would be introduced as early as this year. But a report by Nikkei XTech said it would be delayed until 2022. The report cited Executive Vice President Kiyoshi Fujiwara, who said Mazda opted to delay the introduction so that the rotary could be reengineered to also work with conventional and plug-in hybrid systems.

Mazda is developing a plug-in hybrid setup for larger rear-wheel-drive vehicles, Fujiwara said, adding that the rotary would help differentiate its plug-in technology in smaller vehicles as well.

Nissan was an EV pioneer when it launched the Leaf in 2010. At the time, there was only a small field of electrified rivals, such as the Chevrolet Volt plug-in hybrid, Mitsubishi i-MiEV, Tesla Roadster and Toyota Prius plug-in. Now, the second-generation Leaf is lost in an increasingly crowded market as virtually every major carmaker races to roll out an EV or, in some cases, complete EV lineups.

Nissan's efforts got a boost this year with the unveiling of the Ariya all-electric crossover. It runs on a new dedicated all-electric platform that Nissan will share with French partner Renault and promises longer range and sportier driving, thanks in part to a two-motor awd variant.

The new CMF-EV platform will make it easier to spread volume across the Renault-Nissan-Mitsubishi alliance, said Ivan Espinosa, Nissan senior vice president in charge of global product planning.

Nissan also is banking on its popular e-Power series hybrid technology. In this setup, which is already deployed in Japan in such nameplates as the Note hatchback and Serena family van, a small gasoline engine generates electricity, which in turn powers the electric motor. The driving experience is like that of an EV, but the system eliminates range anxiety by allowing fill-ups at the pump.

In Japan, Nissan also sells hybrid variants of the Kicks and X-Trail crossovers and the Skyline, Cima and Fuga sedans, which are sold under the Infiniti brand in the U.S.

Under its midterm business plan, the carmaker wants to sell 1 million electrified vehicles globally a year by March 31, 2024. That total includes e-Power vehicles. But four more EVs are coming from Nissan by early 2024, plus an electric crossover from Renault.

Nissan also is working up another EV platform for Japan market minicars. An all-electric mini based on the IMk concept shown at last year's Tokyo Motor Show is one of the upcoming EVs.

To strengthen its hand in making EVs, Nissan invested $317 million last year to modernize its Tochigi factory, best known for the GT-R sports cars, to manufacture EVs as well.

Mitsubishi was one of the first automakers to roll out a production EV when it unveiled the pint-size, egg-shaped i-MiEV in 2009. That car, based on the gasoline-powered Japan-market i minicar, eventually found its way to the U.S. for a short sales stint.

Since then, Mitsubishi floated other plans to introduce electrified vehicles, but financial problems routinely pushed the proposals to the back burner. The i-MiEV never got a full redesign, and Mitsubishi has confirmed plans to kill the car. Japan's Nikkei said it will happen this fiscal year.

Meanwhile, the company has long been milking its Outlander PHEV, a plug-in version of its midsize crossover, without delivering a full model change for that entry, either.

Mitsubishi sold about 90,000 plug-ins worldwide in 2019, with 47,758 sold in Japan.

A scandal over manipulating fuel economy data in Japan some years earlier plunged an already-troubled Mitsubishi into deeper chaos, opening the door for Nissan to take a controlling 34 percent stake in 2016. That partnership was billed as pairing two powerhouses in electric drivetrains.

Mitsubishi is now pursuing a new electrification timeline under its latest revival plan. It started with this year's introduction of a plug-in hybrid variant of the Eclipse Cross compact crossover in Japan. There are no plans to bring the plug-in version to the U.S., but Mitsubishi says it will begin selling the electrified Eclipse Cross next year in Australia and New Zealand.

Over the next two years, Mitsubishi plans to introduce a new-generation Outlander, along with a plug-in variant that gets a refined hybrid drivetrain. Also on tap is an all-new electric car for China that Mitsubishi is jointly developing with local partner GAC.

Through the Renault-Nissan-Mitsubishi alliance, Mitsubishi is supposed to spearhead development of plug-in hybrid technology for the entire group. But it remains to be seen whether its two partners have any deep interest in using the technology.

Further out, Mitsubishi is considering an all-electric minivehicle for Japan that would replace the i-MiEV and be based on the minicar system being developed at Nissan.

Honda has long been focused on hybrids and fuel cell technology, though it has also dabbled in EVs at times. The second-generation Clarity sedan was introduced with electric, plug-in and hydrogen fuel cell variants. But Honda eventually stopped selling the lackluster EV version.

This year, however, Honda returned to the EV segment with the all-electric retro-styled subcompact E hatchback. Through September, Honda sold 1,578 E's in Europe and just 23 in Japan.

A lineup of EVs on a dedicated platform is now on the way. Honda said last year the new global EV platform will arrive before 2025 and underpin larger EVs, such as crossovers and sedans, for the U.S., China and other markets.

At the Beijing auto show in September, Honda hinted at the new direction with the Honda SUV e:concept, a sleek futuristic vision of an upcoming battery-powered crossover for China.

The EV rollout is part of Honda's push to generate two-thirds of its global sales from electrified vehicles in 2030. High hybrid penetration in the home market will aid its campaign.

In Japan, Honda's hybrid lineup includes the Insight, Accord, Fit, Freed, Vezel, Legend, Odyssey, NSX, CR-V, STEP WGN and Shuttle, a wagon variant of the Fit. In 2019, Honda sold 182,868 electrified vehicles in Japan, or about a quarter of its home market total.

But Honda also hopes to get by with a little help from friends. In April, it tightened ties with GM to codevelop EVs and their components, in addition to hydrogen fuel cell powertrains.

Under that agreement, GM will help develop two EVs for Honda that will be powered by GM's upcoming Ultium batteries. Honda will design the interior and exterior of the vehicles.

They will ride on GM's global EV platform and be built by GM in North America. Sales are expected to begin in the 2024 model year in Honda's U.S. and Canadian markets.

It is unclear how the GM tie-up will overlap or displace Honda's in-house efforts for a dedicated global EV platform. Honda's U.S. vehicles are usually considered too big for the home market, but the partnership opens the intriguing possibility of "reverse importing" Honda EVs to Japan.