Decarbonization campaign creates supply chain challenges for Japan Inc.

Gone are the days when Japan dominated semiconductor and battery production, industries that are increasingly relevant in the modern world.

The need to decarbonise the economy in line with global climate change efforts is sounding a wake-up call to Japanese manufacturers – as well as the government – forcing them to rise to the challenge of strengthening sectors that will be of critical importance to Japan. meet its emissions commitments while finding a competitive advantage.

An electric vehicle charging station is pictured in the parking lot of Union Station in Washington in April 2021. (UPI / Kyodo)

Losing the race would be a blow to Japan at a time when automakers, the backbone of the country’s manufacturing base, are bringing more electrified vehicles to market, which will require more semiconductors and high-performance batteries. .

The global chip shortage observed since late 2020 is a reminder that robust supply chains and long-term sourcing strategies are the key to success in what is set to become an even more competitive market in the long term, according to analysts.

“Japan is far behind China and South Korea in the field of automotive batteries. I fear we will see a repeat of what happened to the domestic semiconductor and solar panel industries,” said a member of a government carbon panel. neutrality in the automotive sector.

“Strong investment support from the government is needed for the entire supply chain, from battery manufacturing to recycling,” he said.

Japanese automakers have announced their own plans to help achieve the 2050 carbon neutral goal, which major economies like Japan, the European Union and the United States have set as a target.

Toyota Motor Corp., the leader in the development of hybrid and hydrogen fuel cell vehicles, aims to sell 8 million electrified cars globally by 2030, about quadruple the current figure and about 80% of the current annual sales of the Car manufacturer.

Nissan Motor Co., which ten years ago launched its first all-electric mainstream vehicle, the Leaf, plans to electrify all new cars introduced in key markets by the early 2030s.

Honda Motor Co. is also going electric with the intention of ensuring that electric vehicles and FCVs account for 100% of sales by 2040. It is the first Japanese automaker to commit to eliminating completely. gasoline vehicles.

“It’s a tough goal,” new Honda CEO Toshihiro Mibe said in April when he announced the automaker’s plan. “We will strive to take a ‘local consumption of what is locally produced’ approach in Japan for batteries, which will help the growth of the domestic industry,” Mibe said.

Globally, there has been a gradual adoption of electric vehicles over the years with around 10 million vehicles on the roads by the end of 2020, according to data from the International Energy Agency.

Europe has overtaken China as the world’s largest electric vehicle market, supported by stricter CO2 emission standards and government incentives. But the Japanese electric vehicle market has contracted since 2017, when 54,000 registrations were recorded.

“Making continued investments is important,” said Yasuo Saeki, associate professor at Kansai University. “This is how foreign rivals (of Japanese companies) in Taiwan and South Korea have survived in the semiconductor industry.”

“For Japanese automakers, the difficulty lies in the fact that electric vehicles are not that popular domestically, but they also have to develop and market them overseas,” said Saeki, who specializes in strategic management and familiar with electric vehicle issues.

For months, global automakers have struggled with the semiconductor shortage, which has led them to cut production.

Semiconductors are used in everything from smartphones and laptops to cars, and the demand is expected to continue to rise as more “Internet of Things” devices are connected and the evolution towards driving. autonomous and electrification continues in the auto industry, analysts said.

Leading semiconductor foundry Taiwan Semiconductor Manufacturing Co. is stepping up investments to increase production capacity by spending $ 100 billion over the next three years. South Korea’s Samsung Electronics Co., another major chipmaker, has announced plans to invest 171 trillion won ($ 154 billion) by 2030 in its semiconductor business at the exclusion of memory chips.

Ensuring stable supplies of critical components such as semiconductors has become a national security concern as China, the United States and the European Union also focus more on industries.

Promoting the domestic chip and battery sectors is one of the key themes of the Japanese government’s growth strategy, which is due to be approved in June.

Suppliers of battery materials and parts, battery manufacturers and automakers, including Nissan and Honda, have already formed a partnership to secure stable supply chains.

The group’s launch in April reflects growing concerns that Japan will be left behind in the global battery race as competitors in China and Europe, among others, receive more state support.

Battery companies also claim that the cost of electricity, a key issue in the battery manufacturing process, is high and that the dependence on energy derived from fossil fuels, rather than energies. renewable, compromises competitiveness vis-à-vis foreign competitors.

Lithium-ion batteries currently used in electric vehicles present multiple challenges, including the cost and limited range of travel they allow per charge. Securing key natural resources such as lithium, cobalt and nickel needed for such batteries is also part of it. Cobalt is mainly produced in the Democratic Republic of the Congo, where political instability is a concern and where prices have risen in part due to massive purchases from China, industry watchers say.

Some are already fighting to get a head start with Panasonic Corp., a supplier to electric vehicle giant Tesla Inc. and a rival to Contemporary Amperex Technology Co. of China, known as CATL, which is seeking to develop a cobalt-free battery.

Automakers like Toyota and Nissan are developing solid-state batteries that are expected to have higher energy density, extend range, and improve safety in electrified vehicles. Solid-state batteries can replace liquid electrolytes used in lithium-ion batteries and are considered a major breakthrough.

Toyota production manager Masamichi Okada said the automaker will work to meet strong demand for hybrids and plug-in hybrids while stepping up development of batteries for all-electric vehicles.

“As for all solid-state batteries, we are still in the process of developing one and working to speed it up,” Okada said at a recent briefing.

Saeki, of Kansai University, who has conducted research on Tesla, said the electrification campaign will transform the auto industry’s business structure and lead to the restructuring of supply chains.

“It’s not as if electric vehicles are suddenly replacing internal combustion engine cars. And there is the question of how to recycle used batteries,” he said. “It will be a showdown with electric vehicles for years to come, although internal combustion engines may be doomed to lose favor.”

Associated coverage:

Japan raises its 2030 emissions reduction target to 46%

Source link

About Wendy Hall

Check Also

Gavin Newsom receives huge donations from big tech as he battles recall

June 8, 2021Update: June 8, 2021 6:47 p.m. California Governor Gavin Newsom listens to questions …

Leave a Reply

Your email address will not be published. Required fields are marked *