Japan will provide its biggest carmaker, Toyota, with $841 million in subsidies to accelerate the production of electric vehicle (EV) batteries at home, as Asia’s second-largest economy plays catch-up in the global EV rush.
Toyota announced a sweeping plan this week to produce next-gen, high-performance EV batteries and implement a radical redesign of its factories as it races to capture a larger share of the fast-growing EV market, where it has been far outsold by rivals such as Tesla.
“As the international competition for storage batteries is intensifying, competition for capital investment is also becoming more intense,” Japan’s industry minister Yasutoshi Nishimura said, announcing the subsidies.
“Large-scale investments by Toyota group and so on will hopefully lead to a significant strengthening of our country’s supply chain for storage batteries,” Nishimura added.
The government said mass production of the batteries was expected to start in stages from October 2026 onwards.
Toyota said it could not provide any further details about the investment, apart from those already disclosed by the ministry.
Japan’s battery ambitions
Japan, the world’s second-biggest automaker, has designated batteries for energy storage, including car batteries, as important under an economic security law and has earmarked 331.6 billion yen in its second supplementary budget to support their supply and development, the Ministry of Economy, Trade and Industry (METI) said.
The government will shoulder up to 117.8 billion yen ($841 million), or just over a third of about 330 billion yen in investments including for development of next-generation solid-state batteries and lithium iron phosphate batteries, METI said.
It said the subsidy will be provided to Toyota and three companies with which it is working on battery development, including Toyota Industries.
The investment will bring annual production capacity in Japan to 45 gigawatt hours (GWh), Nishimura said, adding the government seeks to achieve domestic output capacity of 150 GWh by 2030.
Japan’s second-largest automaker Honda Motor and battery maker GS Yuasa announced in April the building of a new plant that would target an annual production capacity of at least 20 gigawatt hours (GWh).
- Reuters, with additional editing by Vishakha Saxena