Japan injects USD 2.4 billion to supercharge domestic EV battery production

Japan has announced a substantial support package worth up to 350 billion yen (USD 2.44 billion) for domestic EV battery production. The initiative, revealed by Minister of Economy, Trade and Industry Ken Saito, aims to fortify Japan's battery supply chain and enhance the competitiveness of its storage battery industry on the world stage.

This latest government backing encompasses 12 projects focused on storage batteries, their components, materials, and production equipment. The support is expected to expand Japan's annual production capacity for storage batteries by approximately 50%, from the current 80 gigawatt-hours (GWh) to an impressive 120 GWh, according to reports from Japanese media.

Minister Saito emphasised the strategic importance of this move, stating, "We hope that these efforts will strengthen Japan's storage battery supply chain and the storage battery industry's competitiveness." The initiative comes as part of a series of government efforts to boost the country's EV ecosystem, following nearly USD 1 billion in subsidies pledged in June last year and an initial batch of subsidies distributed in April 2023.

Among the beneficiaries of this support package are some of Japan's automotive giants and their partners. Toyota Motor, in collaboration with its battery subsidiaries Prime Planet Energy & Solutions and Primearth EV Energy, plans to invest approximately 245 billion yen to increase production capacity for solid-state and prismatic batteries by 9 GWh. Toyota confirmed that the ministry had certified its development and production plans for next-generation and solid-state batteries, with supply expected to commence from November 2026. Reports suggest this plan involves constructing battery plants in Hyogo and Fukuoka prefectures.

Nissan Motor has also secured certification from the government for its plan to produce lithium-iron-phosphate batteries. The automaker aims to integrate these batteries into mini-vehicles starting from the 2028 business year, targeting a domestic production capacity of 5 GWh per year. For this initiative, Nissan is set to receive up to 55.5 billion yen in government support.

Panasonic Holdings' energy unit, a key battery supplier for Tesla, is embarking on joint projects with fellow Japanese automakers Subaru and Mazda. In collaboration with Subaru, Panasonic Energy will establish a plant in Gunma prefecture for the production of cylindrical lithium-ion batteries, with supply commencing from the 2028 business year. The joint venture plans a total investment of 463 billion yen, targeting an annual production capacity of 16 GWh from the Gunma plant by 2030. Additionally, Panasonic Energy will supply Subaru with batteries from its Osaka prefecture plant starting from the 2027 business year, adding another 4 GWh to the annual production capacity.

In a separate agreement, Panasonic Energy will manufacture EV batteries at its Suminoe and Kaizuka plants in Osaka for Mazda, beginning in 2027. Mazda will then package these batteries for use in its vehicles.

This comprehensive support package demonstrates Japan's commitment to maintaining its competitive edge in the rapidly evolving global EV market. By fostering domestic production and innovation in battery technology, the Japanese government aims to secure a robust supply chain that can meet the growing demand for electric vehicles both at home and abroad.

The initiative also reflects a broader trend among major economies to localize critical components of the EV supply chain, reducing dependence on imports and strengthening domestic industrial capabilities. As countries worldwide accelerate their transition to electric mobility, Japan's strategic investment in battery production could play a crucial role in shaping the future of the automotive industry.