Japan plans to double the subsidy for electric cars by up to $7000

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Japan will double subsidies for electric cars to up to 800000 yen ($7000), almost on a par with subsidies for electric cars in the United States and Europe, and provide subsidies for charging infrastructure, according to foreign media reports.

The Japanese government plans to allocate 37.5 billion yen ($329 million) to subsidies in the supplementary budget for fiscal year 2021, of which 25 billion yen will be spent on environmentally friendly cars and subsidies for electric vehicles will be raised to up to 800000 yen. The subsidy program will also cover plug-in hybrids and fuel cell vehicles, while other hybrids are still not included.

With global pressure on Japan to give up fossil fuels, the Japanese government hopes to speed up the spread of electric cars in the country. In 2020, electric car sales in Japan accounted for less than 1% of total passenger car sales. The Japanese government's goal is to make all new passenger cars sold in Japan environmentally friendly by 2035, but that goal also includes hybrids. Hybrid cars are still popular at a time when sales of electric vehicles are low. Last year, only 15000 pure electric vehicles were sold in Japan, so the 25 billion yen subsidy program will include pure electric vehicles.

Fuel cell vehicles can receive a subsidy of up to 2.5 million yen, and gas-fueled vehicles of the same size and different prices will also be taken into account. For example, Toyota's Mirai subsidy for hydrogen fuel cell cars will be increased to 1.4 million yen from the current 1.15 million yen. The Japanese government will also allocate 6 billion yen for the new hydrogen filling station.

Japan's limited charging infrastructure limits the popularity of electric vehicles. At the end of fiscal year 2020, Japan had 2. 3 charging piles per 10, 000 people, compared with 6. 9 in France. Japan will set aside about 6.5 billion yen from the new supplementary budget for charging infrastructure, but only a few thousand more charging piles will be added. However, Japan aims to expand its charging network from the current 30, 000 to 150000 by 2030.

The scale of Japan's new subsidy scheme is similar to that provided by Germany, France, Italy, the United States and South Korea. Some countries are using such measures to help their economies recover from the recession triggered by the novel coronavirus epidemic. If the Japanese government considers it necessary to further speed up the electrification process, it may consider investing more money.