Japan's automakers put spotlight on EVs at Shanghai auto show

For Japanese carmakers falling behind local rivals in China’s electric vehicle market, this year’s Shanghai auto show is the perfect place to reestablish their presence. Upstaging Chinese automakers on their own turf, however, won’t be easy.

International names from Volkswagen Group to Ford Motor Co. are expected to unveil a suite of passenger vehicles and flashy concept cars throughout the show, which kicks off Tuesday and runs through April 27. But the focus will be around what EVs are revealed and by whom as the race to electrify reaches fever pitch in the world’s biggest automobile market.

While sales in China have been climbing steadily for Elon Musk’s Tesla Inc. and China’s BYD Co., those of Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. have plateaued in recent years, or begun to slip.

Historically, Japanese automakers had the biggest booths at major events. That wasn’t the case in Thailand this year, according to SBI Securities Co.’s Koji Endo, an analyst who was at the Bangkok International Motor Show in March. Due to COVID, it was the first time in several years the event was held in person. “The biggest booth was BYD,” said Endo, who’s spent four decades covering cars. “Not Toyota.”

Still, Bloomberg Intelligence analyst Tatsuo Yoshida is at least a little optimistic.

“Toyota, Honda and Nissan will be more focused on battery-electric vehicles in Shanghai than at any other local motor show,” he said, adding that the third iteration of Toyota’s bZ series and Honda’s e:NS2 and e:NP2 — which all begin selling in China soon — will be front and center. “The motor show’s happening as the market stalls so carmakers won’t just be focused on future models, they’ll also be looking to shore up sales of current models.”

Earlier this month, Toyota CEO Koji Sato unveiled plans to release 10 new EVs by 2026, including two locally manufactured ones in China by 2024. Toyota’s sales in China last year declined for the first time in a decade, while Honda and Nissan’s have been falling for at least two years.

When Nissan announced efforts to expand EVs in its core markets, it raised electrification goals in all but China, where it said local brands are “leading the way” and have a distinct advantage in procuring semiconductors, batteries and precious metals like copper and lithium.

Nissan unveiled two EV concept cars aimed at Chinese drivers — the Max-Out convertible sports car and the Arizon crossover. The Japanese carmaker also launched the e-Power X-Trail crossover, which starts pre-sales Tuesday.

The Arizon features a new virtual personal assistant named Eporo that’s capable of interacting with passengers in a human-like manner. It also has an interactive lighting system that can recognize people and automatically adapt the illumination to suit their preferences.

In February, Nissan increased its sales target for electric vehicles in Europe and Japan, but lowered the electrification target in China to 35 percent from 40 percent in fiscal 2026.

China “is one of the most technologically sophisticated markets in the world,” Chief Operating Officer Ashwani Gupta said Tuesday. “There is a need for increased electrification and advanced sustainability in the market, and we are working hard to meet it."

In an interview with Bloomberg Television, Gupta said Nissan would launch seven EVs by 2026 and that 80 percent of its lineup would be fully electrified by 2030. He also said talks with partner Renault SA were “very constructive” and that Nissan is committed to taking the alliance into “the next era.”

At a briefing at the show, Gupta said he sees solid-state lithium ion batteries as a “game-changer” for the future. Ultimately it “will be all” solid-state batteries in terms of delivering lower costs and higher performance, he added.

Group of Seven energy and environment ministers met over the weekend in Sapporo as a precursor to the annual G7 Summit that Prime Minister Fumio Kishida will host next month in Hiroshima.

The communique they published Sunday said the group recognizes the opportunity to collectively reduce vehicle emissions by at least 50 percent before 2035, but stopped short of making any concrete plans or commitments to slash harmful greenhouse gases or phase out fossil fuels to fight back the worsening impacts of climate change.

Ministers did reference the potential of hydrogen, biofuels and synthetic fuels in the development of fuel-cell cars and plug-in hybrids — words that should be music to Toyota’s ears, considering its strategy of taking a multi-pathway approach to carbon neutrality.

Toyota plans to sell 1.5 million EVs annually by 2026 but will continue to strengthen investment in hybrids and plug-in hybrids in order to halve emissions by 2035 and become carbon neutral by 2050, Sato said on April 7. In December 2021, Toyota pledged to sell 3.5 millions EVs annually by 2030. That’s despite electric cars only accounting for 16,000 of the 9.5 million vehicles the company sold worldwide in the fiscal year ended March 2022.

Toyota’s insistence in offering gasoline-powered and hybrid cars runs parallel in many ways to the Japanese government’s controversial approach to natural gas, hydrogen, ammonia and nascent carbon capture technology.

Whether such an approach is the right one remains to be seen. But as the doors open to China’s major auto show on Tuesday, what is certain is that Japanese carmakers will have their work cut out wooing customers in a market they can ill afford to ignore.