Japan's Q1 EV Sales Surge 80% YoY as Subsidy Shift Reshapes Brand Performance

In the first quarter of 2024, Japan’s electric vehicle (EV) sales reached 26,959 units, surging 80% year-over-year to hit a record high for the same period and surpassing the 20,000-unit mark for the first time in a single quarter. EVs accounted for over 2.5% of total passenger car sales—a first in Japan. Toyota sold 7,241 EVs in Q1, a 33-fold increase year-over-year, primarily driven by the refreshed bZ4X launched in October 2023. The updated model boasts a range improvement of over 30%, with a maximum range of 746 kilometers. Following Japan’s revised EV subsidy policy in January 2024, the per-vehicle subsidy for the bZ4X increased by ¥400,000, bringing the total subsidy to ¥1.3 million. With an official manufacturer’s suggested retail price (MSRP) of ¥4.8 million, the post-subsidy price stands at ¥3.5 million. The updated subsidy policy raised the maximum subsidy for battery electric vehicles (BEVs) by ¥400,000 while reducing subsidies for fuel cell vehicles. Excluding Toyota, other automakers benefiting from the higher subsidies saw their EV sales surge nearly fourfold year-over-year. Tesla’s sales reached approximately 5,100 units, doubling from the same period last year, while Subaru sold 580 units—eight times its year-ago volume. BYD, which did not qualify for the increased subsidy, reported a 16% year-over-year sales increase in Q1 but experienced a 16% sequential decline. Its EVs sold in Japan currently receive subsidies ranging from ¥350,000 to ¥450,000—significantly lower than Toyota’s. Starting April 2024, vehicles using non-Japanese-made batteries face further subsidy cuts. BYD’s maximum subsidy will drop to ¥150,000—the lowest among all automakers—creating a ¥1.15 million gap compared to Toyota. Other imported EVs also saw reduced subsidies due to their use of non-Japanese batteries: the BMW iX3’s subsidy was cut by ¥170,000 to ¥480,000, and the Volkswagen ID.4’s subsidy decreased by ¥300,000 to ¥360,000. Tesla, however, maintained its original subsidy level because it sources some batteries from Japan’s Panasonic, enabling it to double its Q1 sales. Some Japanese automakers were also affected by the policy changes. Suzuki’s first BEV, the e-Vitara, which uses BYD batteries, will see its subsidy reduced from ¥1.27 million to ¥980,000 starting January 2027. Nissan’s vehicles will also face subsidy reductions as its domestic battery production plans have yet to receive government approval.