HomeLatest newsToyota and Honda can ride the electric wave better than startups

Toyota and Honda can ride the electric wave better than startups

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Tokyo wants clean cars to replace gasoline cars by the mid-2030s. It’s reminiscent of Beijing’s push, but Honda and Toyota have an edge over Chinese startups hooked on aid.

For decades, China relied on batteries to reduce smog and oil imports, encouraging hundreds of entrepreneurs to enter the market. But his fluctuating politics put startups to the test. Just a few months after Nio went public, its second-quarter net losses nearly doubled when Beijing cut subsidies, reducing aid available to buyers of its ES8 sport utility vehicle by 80% from a year earlier.

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Tokyo first drove hydrogen investment in 2014. Even so, Toyota has only sold about 11,000 Mirai since the model’s debut that year. It’s reminiscent of young Chinese electric companies like Li Auto, which had only delivered about 10,000 cars before going public in New York in 2020.

Now Japan will put hydrogen in the fast lane. The government’s commitment could reduce prices and increase investment in infrastructure, such as electric stations, reducing inconvenience and also current costs for drivers: fuel distribution and sale account for 60% of end-user spending, according to the Hydrogen Council and McKinsey. The government also offers generous purchase subsidies, offsetting the high cost of hardware.

The experiment could seduce investors, as Chinese startups have done: Nio and Li Auto are valued at about € 77 billion and € 22 billion respectively, although they haven’t made a profit. Hydrogen sector stocks (Ballard, Fuelcell Energy) are already on the rise in the US.

Toyota and Honda are not specialists. They continue to manufacture combustion models, as well as electric and hybrid. Unlike startups, scale allows them to spread the stakes. That leaves them a lot to gain and relatively little to lose.

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