The Japanese government plans to spend about 100 billion yen (RM3.65 billion) on subsidies towards to construction of battery production plants for electric vehicles, Nikkei Asia has reported.

The subsidies, which will also cover the renewable energy sector, will be approved for each production plant, and companies wanting to receive the financial assistance can apply jointly for the funds. The country’s government is finalising the exact sum to be included in the fiscal year’s supplementary budget, it said.

“We are weighing measures to encourage large manufacturing sites to be included in the economic package,” said Japanese minster of economy, trade and industry Koichi Hagiuda. The Japanese government hopes to encourage major investments that will open the door to reaching the manufacture of 100 GWh of battery capacity domestically by 2030, enough to power 2.4 million EVs.

According to South Korean analytics firm SNE Research, Contemporary Amperex Technology Company Limited (CATL) of China held the largest share of the global EV battery market last year with 24%, while South Korea’s LG Energy Solution in second place with a 23.5% market share. Panasonic of Japan ranked the third-largest market share with 18.5%, which was already down from its share in 2019, noted Nikkei Asia.

China’s CATL holds the largest share of the EV battery market at 24%

The Japanese government worries that the country’s automotive industry will lose its competitive edge if Chinese and European battery manufacturers gain more ground in the EV battery market, the report added.

Global battery supply is expected to reach 1,700 GWh in 2025, from 420 GWh in 2020. Of that projected sum, China will contribute around 750 GWh, with Europe supplying around 730 GWh; other regions such as Japan are estimated to bring around 30 GWh, it continued.

Japanese automaker giant Toyota announced in September that it will be investing US$14 billion (RM58.2 billion) into EV battery technologies, including solid-state, lithium-ion and nickel-metal hydride battery technologies.

Toyota’s work with batteries for propulsion dates back to the first-generation Prius which used nickel-metal hydride batteries, and the automaker will continue to develop lithium-ion batteries for improved cost and endurance, and a new battery of the kind is expected to debut in the second half of the 2020s, said Toyota.