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A New Japanese EV Joint Venture to Offer a Battery-Powered Car for Under $10,000

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【Summary】Japanese oil company Idemitsu Kosan Co. plans to set up a new electric-vehicle joint venture with local automaker Tajima Motor Corp. The new joint venture is named “Idemitsu Tajima EV” and plans to unveil its tiny electric vehicle in October and have them in showrooms by 2022, the two companies said Tuesday. The compact electric car will start around 1 million yen ($9,500).

Eric Walz    Feb 16, 2021 11:25 AM PT
A New Japanese EV Joint Venture to Offer a Battery-Powered Car for Under $10,000
Idemitsu displayed a concept of its tiny EV at the Tokyo Motor show in 2019. (Photo: Nikkei)

Japanese oil company Idemitsu Kosan Co. plans to set up a new electric-vehicle joint venture with local automaker Tajima Motor Corp in April as companies in Japan face increasing pressure to meet the government's aggressive targets to reduce greenhouse emissions, Japan's Nikkei reports.

Idemitsu is the second largest petroleum refiner in Japan, after Nippon Oil.

The new joint venture is named "Idemitsu Tajima EV" and plans to unveil its tiny electric vehicle in October and have them in showrooms by 2022, the two companies said Tuesday.

The compact electric car will start around 1 million yen ($9,500). 

The inexpensive EV will offer drivers in Japan a basic, zero emissions mode of transportation. The mini EV will have a range of about 120 kilometers (75 miles), seat 2 to 4 passengers and run at a maximum speed of just 60 kilometers an hour (37 mph). 

The ultra-compact electric car will measure 2.5 meters (8.2 feet) long and 1.3 meters (4.3 feet) wide.

The joint venture predicts demand of around 1 million units a year. Idemitsu Tajima EV also sees demand from business people who need to travel short distances for everyday driving but who don't require an expensive vehicle. The electric vehicle is particularly well suited for new drivers.

The two companies will begin producing the electric vehicles at Tajima Motor Corp's facility in Shizuoka Prefecture as early as this fall. Once production is established, a dedicated facility will be built, according to Nikkei.

The joint venture is experimenting with different EV batteries produced overseas and locally and plans to use recycled batteries if possible.

Power will be generated by lithium-ion batteries that will be purchased from outside the company. The EV will be able to charge using standard household outlets in Japan, which will take around 8 hours.

Japan's Prime Minister Yoshihide Suga has pledged to decarbonize Japan by 2050 and ban the sale of new gasoline-only vehicles by the mid-2030s, which is similar to the goals of the European Union.

That's a challenge for many small automakers like Tajima Motor because electrification and its related technologies adds to their expenses. 

Electric automaker Tesla, which is now the world's most valuable car company, is even finding it a challenge to offer a more affordable electric car without erasing its profits.

Tesla Chief Executive Elon Musk has long promised a sub $35,000 mass-market electric car, but so far the company has not been able to lower the price of the Model 3 any further without cutting into its profit margins, which are razor thin to begin with. This is mainly due to the high cost of EV batteries, which make up a significant portion of an electric vehicle's price.

EV batteries cost roughly $140 per kWh to produce, although the price is steadily dropping. A decade ago, batteries cost around $1,100 per kWh to produce.

The Standard Range Plus Model 3 sedan for example, starts at $37,990 in the U.S. It uses a 54 kWh battery pack.

"We hope to develop a car that is convenient while lowering costs," said Nobuhiro Tajima, CEO of Tajima Motors.

According to BloombergNEF's 2020 Battery Price Survey, by 2023 the average price to produce EV batteries will fall to $101 per kWh. At this price point, automakers will be able to produce and sell mass market EVs at the same price as comparable internal combustion vehicles in some markets.

For Idemitsu, the new joint venture is an opportunity to diversify its business as countries around the world are aiming to reduce carbon emissions that contribute to climate change.

"We're in an era where types of energy and mobility are becoming more diverse," said Idemitsu Kosan President Shunichi Kito. "We have to approach the 2050 carbon-neutral target as a main player."

Idemitsu Kosan is looking to apply its expertise in making high-performance plastics and solar panels to build electric vehicles, he said. The body panels of the compact EV will use high-performance plastics developed by Idemitsu Kosan using its expertise in petrochemicals. 

The company is also researching the development of lithium-ion batteries for the auto industry.

Other leading oil companies, such as Shell, BP and Chevron are investing in EV charging infrastructure as the demand for gasoline for internal combustion engine vehicles is expected to drop over the next twenty years as the auto industry moves towards electrification.

Shell partnered with EV charging operator Ionity, to provide EV-charging across Europe. Inoity is a joint venture owned by automakers BMW, Daimler AG, Ford Motor Company and Volkswagen Group. In 2019, Shell acquired U.S. company Greenlots, a California-based EV charging operator. 

Idemitsu will sell the vehicle at its 6,400 gas stations in Japan, which will also offer car-sharing services, as well as maintenance. The company expects gasoline demand to decline over the long term. But with the growing EV market, oil companies including Idemitsu hope to find a new role for their gas stations.

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