By Kentaro Otsuka and Hiroaki Otake / Yomiuri Shimbun Staff Writers

Sales of electric vehicles are on the rise in Japan, with the figure for the first half of 2026 reaching 59,337 units — 2.1 times the previous year's first-half figure — and accounting for a record-high share of about 3% of total passenger car sales, according to figures released on Monday by entities including the Japan Automobile Dealers Association.

While the launch of new models and government purchase subsidies have provided a tailwind, it remains unclear whether this momentum will last.

The best-selling EV overall was Toyota Motor Corp.'s SUV bZ4X with 13,777 units sold — nearly 70 times the previous year's figure. Second place among domestic carmakers went to Nissan Motor Co.'s main EV, Leaf, with 10,012 units. Among foreign manufacturers, U.S.-based Tesla Inc. took the top spot, with sales estimated at around 12,000 units.

One factor behind the strong sales is improved performance resulting from the launch of new models and upgrades. Until now, Japanese EVs had relatively short driving ranges for their prices, making them seem inferior to their foreign counterparts.

Toyota's bZ4X saw its range improve by about 30% following a partial upgrade in October last year, enabling it to travel up to 746 kilometers on a full charge. Nissan also launched a new model of Leaf with a popular SUV-style design in January this year, which features an extended range.

Policy support has also played a major role. In January this year, the government raised the maximum subsidy for EVs by 400,000 yen to 1.3 million yen. While the maximum subsidy for minicar EVs remained unchanged at 580,000 yen, many domestic models are receiving the full subsidy amount.

One EV model benefiting from this subsidy system is Honda Motor Co.'s compact Super-One, launched in late May. Originally priced at about 3.39 million yen, including tax, it can be purchased for 2.09 million yen — on par with minicar EVs — when the subsidy is applied. Demand has been overwhelming, with some dealerships temporarily suspending acceptance of orders.

Some local governments are also offering additional subsidies. The Tokyo metropolitan government raised its subsidy cap in July in response to rising crude oil prices caused by the Middle East situation. Models from Toyota, Honda and Nissan, in principle, can receive subsidies of 900,000 yen or more per vehicle.

Outlook remains uncertain

However, the outlook for the domestic EV market remains uncertain. With subsidies becoming the norm, a "market distortion" has emerged in some sectors in which new cars are cheaper than used ones. Because new cars can be purchased at a lower price, used car prices have fallen below their actual value, raising concerns that consumers who worry about resale value may avoid EVs.

In addition, because EVs do not have internal combustion engines, they contain fewer parts. Japan's major automakers, which rely on a large number of subcontracted parts manufacturers, are reluctant to shift rapidly toward EVs due to concerns about the impact on employment and other factors.

Hisashi Ando, an analyst at research firm Fourin Inc., remarked: "While it is unavoidable to rely on subsidies until EVs become widely adopted, sales are currently concentrated on a limited number of models. Unless the lineup expands, the market will not grow."

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This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.

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