One of the auto industry figures I admire most is a man named Yutaka Katayama. He's no longer with us, having died in 2015 at the age of 105. As a longtime Nissan executive, Katayama's accomplishments were many, including expanding that company into the U.S. market and giving us performance icons like the 510 and Z-car—often by breaking the rules, getting away from the overly conservative business culture back home and understanding what his buyers really wanted.
This didn't make Katayama a popular guy at Nissan, but it didn't make him wrong, either. The company probably should've listened to him more. Now, Japan Inc. faces a similar moment in the electric vehicle race as China rises fast, and one executive who knows his stuff is sounding the alarm.
That kicks off this Monday edition of Critical Materials, our morning industry and tech news roundup. Also on tap today: we begin to look at the impact of the U.S. presidential election on the EV field, not just here but globally.
30%: 'We Need To Change This Kind Of Behavior'
One of my favorite Katayama anecdotes is how, in defiance of his bosses back in Japan, he allegedly ordered the "Fairlady Z" emblems stripped off the U.S. shipment of those sports cars and gave them "240Z" badges instead. Katayama had been posted up in America for a while. He understood Americans and knew that American sports car buyers, often young men, wouldn't have anything to do with a car called "Fairlady."
That story may be bullshit, to be clear. But Katayama always knew what he was talking about. Today, I'd wager that Yasuhide Mizuno does too. He now heads up the curious Sony-Honda EV joint venture called Afeela, and it's a project meant to create the kind of aggressively software-driven electric car that China already excels at. Mizuno would know: he led Honda’s China operations for years, and he knows that country is a place where the Japanese automakers are getting hammered.
In a new Financial Times interview, he warns that such an outcome could happen elsewhere if Japan's automakers don't accelerate EV investments and, well, accelerate in general:
Mizuno said Japan’s companies needed to change their conservative corporate culture and called for a breakthrough in manufacturing to keep up with Chinese rivals, which within a few years have become some of the world’s leading vehicle exporters.
“Japanese carmakers are a bit nervous or sensitive before launching a car. We need to change this kind of behavior, otherwise China will be first and we will always be followers,” added Mizuno, who led Honda’s China operations until 2020.
Mizuno said Chinese competitors were moving faster than he had anticipated. Buoyed by large government subsidies and the recruitment of top Japanese, European and US engineers, the development time of Chinese electric vehicles — from concept to production — has shrunk to as little as 18 months, he estimated, adding that was less than half of the time it took to develop a car in Japan. “Since China-made electric vehicles will not be entering the US, the choices for consumers will be limited,” Mizuno said. “But instead of feeling good that Chinese cars will not be coming in, I feel that we should launch a car that can directly compete with Chinese rivals.”
He added some interesting details about the Afeela EV, which he said will be aimed at “wealthy geeks” and not be a mainstream car. That makes sense, especially since everyone was wondering how it might fit into Honda's other EV plans. But he said developing the car together aims to boost sales and production of key EV parts and sensors, while teaching Honda engineers how to build a properly software-driven car.
That alone won't put Japan on a course to properly compete with China after years of huge government investments and intense EV competition from within, but more executives would do well to listen to Mizuno here.
60%: Korean Firms May Roll Back Battery Investments In U.S. If Trump Wins
Meanwhile, the U.S. has its own fight to stay ahead of China in the battery and EV race, and that will come down to the presidential election. Yes, the one that as of this weekend will pit Donald Trump against Vice President Kamala Harris, depending on how the Democratic convention goes.
Bloomberg reports that due to uneven EV demand—I don't agree with the "lackluster" label they used—Korean battery giant LG Energy Solution Ltd. is slowing construction of its third plant with General Motors, the one in Michigan. Operations were originally supposed to begin in the first half of next year, the news outlet reports.
But the election will really determine the fate of the EV industry:
For Korean companies in particular, the looming U.S. presidential election is another big risk. Many invested heavily in North America after President Joe Biden’s clean energy bill, which encourages the local manufacture of EVs and seeks to limit reliance on Chinese players.
Former President Donald Trump has vowed to take action against the so-called Inflation Reduction Act and wind back Biden’s pro-EV policies should he win the election.
Korean battery makers may want to scale back their investment plans for battery plants in the US if there’s any change in the IRA after the US presidential election, a June report from the state-run Korea Institute for Industrial Economics & Trade said.
We'll be covering this more over the next few months, but we're talking about $188 billion in investments, some 200,000 existing or planned jobs and serious climate implications if America backs off in the EV race. Meanwhile, China will hardly be slowing down on this technology.
90%: Hot EV Discount Summer
But if you want to buy an EV—or get a newer one—now is definitely the time to do it. Here's the Wall Street Journal on the aggressive discounts we're seeing right now:
Four of the five vehicle models with the biggest drop in list price over the first half of this year were electric, including the Chevrolet Blazer and Volkswagen ID.4 SUVs, according to shopping site CarGurus.
On average, buyers paid about $1,500 more for nonluxury EVs than internal combustion engine vehicles, according to a July J.D. Power report. Just over a year ago, the average EV fetched $8,400 more.
In some cases, electric models that once came with a hefty premium are actually cheaper than their combustion-engine equivalents. Ford Motor’s F-150 Lightning—the centerpiece of the company’s EV strategy when it was unveiled in 2022—is selling for about $5,000 less than its gas-engine alternatives, according to J.D. Power data.
Leasing is hot because the $7,500 tax credit loophole applies to any EV at the point of sale. But there's a lot of uncertainty over used values too:
Used-car shoppers considering an electric must gauge what will happen with EV valuations in coming years, CarGurus analyst Kevin Roberts said. That math can be difficult given potentially rapid changes in battery technology in newer EVs, which could hurt used values.
“We’re in unknown territory at this point,” he said.
Still, two InsideEVs editors took advantage of those deals right now and added two new EV models to our personal fleets, which you'll read about soon. Are you in the market right now?
100%: What Happens If America Backs Off Its EV Investments?
Let's game this out, especially now that Trump is flirting with the idea of welcoming China's automakers to build in the U.S. If the IRA incentives disappear, what happens to the U.S. auto industry and the EV transition more broadly? Speed bump or car crash?
Contact the author: patrick.george@insideevs.com
