Major Japanese energy companies are stepping up their efforts to expand the domestic electric vehicle market, in which Japan, with EV adoption rates of just a few percent, lags the rest of the world.

As the energy industry marks 10 years since the full liberalization of the retail electricity market, the question now is whether companies can move beyond competition based solely on selling cheap electricity and create value that will attract customers in the era of decarbonization.

Difficulty in generating profits

The retail electronics chain Joshin opened a store location near JR Nara Station in 2024. To stand out in a fiercely competitive field, crowded with rival chains like Edion and Yamada Denki, the store is emphasizing environmental initiatives, along with a community-focused approach. The building features solar power generation and high-performance insulation, and its parking lot is equipped with two EV chargers.

Yoshikiyo Imanaka, a 69-year-old man from Nara City, visited the store on July 14 in a Honda kei EV. "It's convenient to be able to charge my car while I'm shopping," he said.

The chargers were installed by Kansai Electric Power Co., which entered the commercial EV charger business in the same year the store opened. Stores are free to set their own usage fees for customers. Joshin offers free charging at all 28 stores where chargers are installed, which it believes will help attract customers, in addition to contributing to environmental protection. Takara Sakamoto, section chief of the construction department of the operating company Joshin Corp., explains, "There are no installation costs, and Kansai Electric handles the management, which is reassuring."

Charging infrastructure is essential for EVs. In 2023, the government unveiled an ambitious plan to increase the country's number of charging ports (approximately 68,000 as of the end of March 2025) to 300,000 by 2030, prompting major energy companies to enter the market.

However, with EVs themselves still in a transitional phase toward widespread adoption, the situation remains one of upfront investment. In May, Tokyo-based Miraiz Enechange Ltd., a Chubu Electric Power Co. group company and the industry leader with over 10,000 charging ports nationwide, filed for bankruptcy protection under the Civil Rehabilitation Law. The company determined that "utilization rates are not rising, making it difficult to achieve profitability on our own."

Kansai Electric also plans to increase its number of charging ports to 1,000 within the current fiscal year ending March 2027, but the company is taking a cautious approach, in line with current demand trends. "We want to create an environment where users can drive with peace of mind, even as we keep a close eye on profitability," said Daiki Kawakami, section chief of the e-mobility business group.

Toward a 'new power infrastructure'

Amid this uncertain outlook, the energy industry's focus on the EV sector is driven by changes surrounding renewable energy sources such as solar and wind power. Renewable energy generation fluctuates significantly depending on weather conditions and time of day. If electricity generation and consumption fall out of balance, it could lead to power outages. As EVs become more widespread and can function as "mobile batteries" to store electricity, it will become easier to adjust supply and demand in response to generation levels.

Since 2016's retail electricity liberalization broke up de facto regional monopolies, electricity has become a "commoditized product," according to Kawakami, and price competition has intensified. As companies seek ways to differentiate themselves, the combination of expanding renewable energy-derived power and EVs represents a new "electricity infrastructure" and is becoming a crucial strategic tool for securing customers in the decarbonization era.

Kansai Electric plans to make a massive investment of approximately 1 trillion yen in zero-carbon sectors, including renewable energy, by 2040. Osaka Gas Co., which aims to invest about 220 billion yen in decarbonization by fiscal 2030, in collaboration with the Panasonic group, has begun a demonstration project for a demand response system which will automatically control home EV charging and stabilize electricity supply and demand. Shikoku Electric Power Co. also plans to invest just under 200 billion yen in low-carbon and decarbonization sectors by fiscal 2030, while Chugoku Electric Power Co. is conducting trials of using EVs to store its renewable energy and transport it to other locations.

Resale value remains a barrier to adoption

The focus is on trends in the domestic EV market, where adoption is continuing at a gradual pace.

According to a report by the research firm MarkLines Co., EVs accounted for 1% of new car sales in Japan last year. This sluggish performance stands in stark contrast to regions such as China (28%) and Europe (15%). Although the Japanese government is expanding measures to boost sales, such as subsidizing purchases, Prof. Atsushi Osanai of Waseda Business School notes, "There are many challenges that EVs themselves must overcome, such as improving resale value."

According to Nagoya-based Proto Corp., which operates the used car information site "Goonet," EVs can experience significant depreciation -- in some cases, their value drops by 70% within three years of purchase.

It is more difficult to assess the degree of degradation in an EV's onboard battery than in the engine of a gas-powered car. Used car dealers tend to set appraisal values low to account for this risk, and buyers -- concerned about the decline in battery life and driving range, which directly affect the vehicle's value -- tend to shy away from them.

Osaka Gas is conducting research to overcome these EV-specific challenges. Kyoto-based KRI Inc., a subsidiary where Akira Yoshino -- the developer of lithium-ion batteries, for which he won a Nobel Prize in chemistry -- serves as an executive adviser, has developed a technology for diagnosing the condition of EV batteries. By monitoring the battery's reaction during charging for several dozen minutes, the technology can detect signs of degradation. The company is also working to establish technology for detecting fire risks. Senior Executive Officer Hajime Kinoshita stated: "This is a life-or-death issue that is making consumers reluctant (to use EVs). Ensuring safety is an urgent priority."

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This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.

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