America’s Auto Industry Can Learn a Thing or Two from Japan

US manufacturers might not have the best grasp on what drivers want. The ones who seem to know reside about 6,000 miles away in Japan.

Photo illustration of an electric vehicle charger with the cord depicting a dollar sign, in front of a map of Japan
Photo illustration by Connor Lin / The Daily Upside

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In the ‘70s, when Detroit was churning out gas-guzzling muscle cars, Japanese carmakers counterprogrammed with fuel-efficient cars that, as a bonus, didn’t break down every 30 or so miles. 

Half a century later, Japan Inc. zigged again as US automakers zagged — and it’s working just as well as it did the first time.

In the past few years, America’s biggest and oldest automakers all began announcing they were steering heavily into the EV market to cash in on the growing fervor surrounding the green revolution. They still plan to get there eventually, but the push toward mostly or all-electric fleets has slowed considerably in the face of middling sales numbers and a country whose infrastructure just isn’t outfitted for the electric road today, let alone ahead. It’s not a U-turn, but more so a detour.

And that’s because US manufacturers might not have the best grasp on what American drivers want, need, or can afford right now. The ones who seem to know reside about 6,000 miles away in Japan.

Positive Charge: The two biggest road bumps for auto manufacturers’ bets on EVs in America remain price and charging. There’s more progress on the former than the latter. 

“EV batteries take a long time to recharge — which potential customers dislike — and electric charging stations are too few and far between — which potential customers fear,” Widener University marketing professor Brian Larson said. “Without quick-charging batteries and a huge increase in the number of charging stations, both things outside the control of any auto manufacturer, EVs are still a bit more of a dream than a solution.”

However, Larson did recognize UK-based battery maker Nyobolt, whose prototype successfully charged from 10% to 80% in just four minutes and 37 seconds, as a possible game-changer:

  • Lack of public chargers — there are just 61,000 in the country — is starting to make drivers second-guess themselves.
  • A McKinsey & Co. survey found that 29% of EV owners globally are likely to switch back to a combustion engine car due to charging difficulties; in the US, that figure was 46%.

This Cost How Much? The price of the average EV is dropping, but charging concerns are all but draining whatever consumer enthusiasm there might have been. As a result, battery-powered cars make up only 1% of all registered vehicles in the country. In terms of sales last year, EVs represented just 2.9% and 3.8% of GM’s and Ford’s total volumes, respectively.

“With new EVs, the premium has gone down,” Cox Automotive director of strategic planning Stephanie Valdez Streaty told The Daily Upside. “Six years ago, it may have been a $15,000 difference. When we finished May, the average EV was almost $57,000 vs. an ICE+ [gas hybrids and plug-in hybrids], which was about $48,000. The gap is slowly shrinking, but that’s still expensive. But a used EV and a used ICE are very close, only about a $2,000 difference. That’s going to be important for adoption rates.”

You won’t find any affordable Chinese cars on US roads thanks to 100% tariffs, but Valdez Streaty said dirt cheap vehicles like BYD’s $10,000 Seagull will help accelerate the launch of a more affordable EV from Western automakers. Case in point: Ford is planning to release a $25,000 compact, electric SUV in late 2026 to rival the upcoming Tesla model, codenamed “Redwood.”

A Lesson from Nippon

It’s not that EVs are a money pit — far from it — but the all-in strategy that many Western automakers bet on is not the only strategy. Toyota is the global leader in car sales, delivering 11.2 million vehicles last year, so the company based in Aichi Prefecture just outside Nagoya is probably the best place for America’s auto industry to look if it wants to understand drivers’ demands.

Americans bought 2.2 million Toyotas in 2023. They like the cars because they’re highly affordable: most Camry and Corolla models start below $30,000.

While Toyota intends to work toward a greener future, it’s not EVs or nothing. After all, if Americans have heard of hybrids, it’s because Toyota popularized the category starting in the 2000s with its Prius, famously owned by Larry David in Season 2 of Curb Your Enthusiasm. And sticking to its hybrid strategy is paying off:

  • Last fiscal year, Toyota sold 3.4 million hybrids globally, roughly 30% of the company’s entire volume. Its total sales revenue jumped 21% year-over-year to $290 billion.
  • Toyota — along with Mazda and Subaru — recently unveiled prototypes for new, smaller combustion engines that can be used in hybrid cars and can run on alternative fuels like hydrogen in addition to traditional gasoline. 

It’s going to be a long time before the majority of drivers are using EVs, so Toyota was shrewd to offer a hand-holding alternative to antsy consumers. “I don’t think it’s going to win out over electrification, but it’s good to provide consumers with options,” Valdez Streaty said.

Larson said Toyota’s tentpole status gives it the luxury of easing consumers into a greener world. 

“Toyota notes that while BEVs have benefits for the environment, they are not the only path [and maybe not even the best path] toward lowering global emissions,” he said. “Electric vehicles are considerably more expensive than traditional automobiles, making them go unbought. And unbought, unused EVs don’t solve the problem.”