Push to go electric could wipe out Japan’s cheap microcars

Bloomberg
·2-min read



Japan’s kei cars, known for their affordability and small engines, face a potentially existential threat as the country leans on automakers to go electric as part of its net-zero emissions goal.

Kei means “light” in Japanese, and the category makes up about a third of new domestic automobile sales. They’re a popular means of transportation outside of major cities, used by farmers and families that need multiple vehicles to get around. Cheap to buy and own, keis are mainly manufactured for the home market, with engines limited by law to 660 cubic centimeters (40 cubic inches).

Japanese Prime Minister Yoshihide Suga pledged last year to decarbonize Japan by 2050, with plans to ban the sale of new gasoline-only vehicles by the mid-2030s. That’s created a dilemma for Honda Motor Co., Nissan Motor Co. and other makers of compact cars, with the added cost of technology making them less affordable for buyers. Electrification can add 1 million to 2 million yen ($9,600-$19,200) to the price tag of a kei, potentially doubling its price, according to Tokyo Tokai Research.

“Affordability and convenience are the lifeblood of compact cars,” said Hitoshi Horii, the head of the Japan Mini Vehicles Association. “These cars are important mobility that work as infrastructure and something that replaces public transportation.”

Kei cars are common in rural areas, where public transport systems are sparse. They’re well suited for Japan’s narrow roads, of which 85% are only wide enough for two kei cars to pass. That figure was cited by Akio Toyoda, chairman of the Japan Automobile Manufacturers Association and Toyota Motor Corp.’s chief executive, in December.

“The kei is Japan’s national car,” Toyoda said. Daihatsu Motor Co., Toyota’s unit that makes keis, hasn’t shifted toward electrification as much and achieving carbon neutral with the current energy mix is crucial, he said. “People maybe able to live in cities without keis, but once you’re in a rural region, these cars are a necessity.”

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