Efficient Cars And EVs Killing Demand For Gas In Japan, US Next?

5 years ago by Jay Cole 19

EV Charging Station In Japan Juices Up Mitubishi's Electric (Kei-sized) i-MiEV

In the past one could argue that there was a natural ebb and flow of gasoline prices, and that any changes were the product of regional supply issues, or greater worldwide economic pressures affecting the pocket book of consumers.  And for the most part, that is still true.

Except in Japan.  That country has been using less and less crude, which has been allowing the price to not only drop precipitously over the past year and a half, but more importantly, has decreased the overall demand at the pumps as well.

Honda's Solar Charging Station in Japan

Japan is the unashamed leader in all things small in cars.  They even have a segment below subcompact, kei (or  keijidōsha if you will), which loosely translated means light automobile.

These cars are noticeable not only by their diminutive size, but their specialized yellow and black license plates.  And if you think this segment is just a small off-shoot of the car industry in Japan (like the Mitsubishi i or SMART Fortwo  here in the US), you would be wrong.  As an example of thier proliferation in Japan, one out of every four cars Honda sells in the country are in this category…and they are lagging behind.   Overall, kei cars account for 35% of all automobiles sold.

These cars (and the government discounts and rebates that come with them) alone have put incredible downward pressure on the country’s gas needs, but now electric cars are pushing individual petrol needs even lower.

Electric car adoption is highest worldwide in Japan, which inherently make sense given Japan is an island and has an intense urban, and relatively wealthy population.   Since the beginning of last year, over 50,000 fully road capable plug-in EVs have been sold, with more than 4,000 being added to that number every month.  A number which is growing rapidly, and is estimated to double by the end of next year.

Virtual SMART EVs Around a Charging Station Of The Future

And while 4,000 plug-in EVs sold a month doesn’t sound like a huge number, one has to consider that while Japan has about 40%the population of the US, they only sold 2.7 million regular (non-kei) cars last year. 

That translates to about 1 in every 50 new cars in Japan has a plug, a figure that will will expand to 1 in 25 by the end of next year.  Sales of 4,000-8,000 plug-ins per month in Japan would translate to 20,000-40,000 here in the US.  Thats a lot of new cars being plugged in every month.

The effect of all these kei and plug-in cars?  Gas will hit a 17 month low this month in Japan, but more important than the price, is that actual consumer total demand for crude is plunging, as the country as gone from a peak of 60,000 gas pumps in the 90s to just under 38,000 today.  Who cares how much gas is if you aren’t using any?  Or if you are only using half as much as you used to.

Japan’s dependency level on oil peaked right around the millennium.  And thanks to a change in transportation vehicle demographics, has since fallen 7% (despite a recent hiccup with all nuclear power going offline in March of 2011 after a giant tsunami hit the coast of Japan).   Overall oil consumption is expected to fall by at least another 6% by 2020. 

The ANR (Agency for Natural Resources) says that in about 15 years, over half the cars on Japanese roads will be electric vehicles, and the other half will consist mostly of small minicars and hybrids.   Japan can look forward to even less pumps in their future.

This impressive result today in Japan is one the administration in Washington is hoping to emulate in some way over the coming decade.  While it is highly unlikely US consumers will ever accept supermini cars as an answer to the cost of gas, vehicles with plugs are a different story.

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19 responses to "Efficient Cars And EVs Killing Demand For Gas In Japan, US Next?"

  1. NRGTom says:

    Japan relies on oil so much more than the US its no wonder they are moving the fastest on getting off it. At least they are showing us it can be done

  2. Wood Foss says:

    Your conclusion is very iffy. Hybrids are probably the near term (10-15 years) most acceptable auto. Plugin electric vehicles (PEV) for Americans currently produce a “Range Anxiety” which could soon be listed as a psychiatric disorder…. Even though 70-80 miles of daily driving is good for 360 days a year for 95% of all Americans, we just don’t like to be restricted. I do believe time will help, however, I do not see plugins as a mainstream vehicle for most of us.

    On the second point of smaller cars, we are buying them. I see alot on the road and it does seem much more acceptable. There is a town in Florida which has allowed golf cars to be driven on the highway and people seem to love it. Our own consumption of gasoline has fallen in the last few years. That is due to higher mileage requirements and the bad economy.

    I would also add the technology in Internal Combustion Engines is rapidly improving. And, we keep finding more ways to process newly discovered oil. People weight the cost benefit of PEV and ICE and unless you have a regular commute in the PEV it currently is not financially beneficial to own a PEV. The sales pitch on becoming “Green” only applies to a small dedicated population.

    In conclusion I recently purchased, consumer order #0001, of the Ford Focus Electric. It is an amazing automobile and I am seeing dramatic savings in my daily 80 mile commute. But my daughter just went out and ordered a new Suburban, my other daughter owns a Touareg and my son enjoys his Explorer…. WTF

    1. Jay Cole says:

      Good points, and gratz on getting the first Focus Electric! We had one for an extended test drive for a week just before the launch and were really impressed, you made a good choice!

      As to the article, I think the crux of it is that America would like to be where Japan is now in 10 years time, vis-à-vis Japan’s overall .5-.7% annual declining gas consumption curve.

      Like your kids, it going to be tricky to get off big ICE vehicles in any meaningful way in the very near term. And I don’t see us cramming ourselves into the ‘ultra-small’ cars either anytime soon. The plug is really the only long term way to significantly decrease gas usage (or even CNG if you see that as an alternative) given a rising population.

      The US’ salvation short-term (next 5 years) probably lies in hybrids, and plug-in hybrids while we wait for full BEV technology to make the next jump, and for costs to halve. We don’t have 2/3rds or the population living, working and playing within a few mile radius like Japan.

    2. Mark H says:

      Congrats on your Ford Focus. One EV per family will be a great start. Almost every family has at least one driver with a five day regular commute. For the range anxiety, there is always the Ford Fusion or the Chevy Volt which is what I selected. As for the expense, the vehicles are currently aimed at the 15,000 mile driver willing to keep their EV for 6-8 years. If one fits that category, the math looks pretty sustainable already.
      http://www.afdc.energy.gov/calc/

  3. Josh says:

    It is good to see progress in an economy as large as Japan’s to use as a case study for US adoption and to drive the technology. Although there are certainly big differences in the demands/requirements of American customers compared to Japan.

    In the US market, it’s likely that the plug-in’s will stay a “premium” vehicle enjoyed by the ones that can afford it for the next ~5 years, but that is a natural way for the demand to build for mass adoption anyway.

  4. Delta says:

    EV’s are experiencing exponential growth. The first few doublings of demand don’t look like much but in 5 years it becomes evident. Compare EV’s to the cellphone over the last 25 years. It started as a heavy clunky rich man’s toy.

  5. MrEnergyCzar says:

    Most of the Right and oil dictators hate this headline…

    MrEnergyCzar

  6. NZDavid says:

    In Japan we are starting to see scale reverse itself. As local gas stations close due to small sales and people have to drive further for their regular fill, pluging in at home just looks easier and easier. This is all good for EV’s adoption.

    1. Paul K says:

      Fantastic article, Jay, very encouraging. Wouldn’t surprise me if big oil attempts to thwart BEVs AGAIN!! Just like the GM EV-1, circa 2000. We know who bought them out and ordered the crushing.

      In reply to NZDavid, I envision a couple long term solutions to the paradigm and infrastructure shift BEVs will require. If BEVs could standardize and modularize their battery packs, all gasoline stations could be converted to battery swapping stations, thus alleviating range anxiety. One would merely stop at a battery swapping station and swap out their dead battery for a fully charged pack, a new meaning for “filling station”. There would be issues of battery life of the one your receiving but I believe that could be factored in the swap.

      Can you imagine the US telling OPEC to take a hike? Hope I am still around to witness it!!

  7. Marc Lee says:

    Jay great article. I have not seen a whiff of this from any of the Western media. Kind of incredible and encouraging really to see the gas trend can be turned around so quickly.

    1. Jay Cole says:

      Thanks Marc! Good to see you around, (=

  8. SilverBlade says:

    Of course Japan is relying less and less on oil. They are the tech capitol of the planet, plus their population is very condensed on an island.

    The same thing will *not* happen in the US..or Canada. Not for a long time.

    First off, the U.S and Canada is very expansive, which leads to a good number of people needing to commute more than an hour each way to and from work. This alone will make EV’s not a viable option for those living outside the cities.

    Second, it’s the governments of Canada and the U.S. Both are heavily influenced by the Oil companies (especially the U.S. Not so much for Canada). The oil companies would rather see electric vehicles become illegal here.

  9. KeiJidosha says:

    I owned three kei cars in the 70’s. they are useful, efficient transportation. The NHTSA and the IIHS insure they will never make it back to the US. Interesting graph of US car sales for the first half of the year.
    http://blog.caranddriver.com/wp-content/uploads/2012/07/SalesbySegment-H1-2012.jpg.jpg
    B-Segment sales don’t telegraph a profitable market for the kei here either. If US buyers shun the Fiesta, Yaris, Fit, and Smart already, what chance does the N-Box have?

  10. 1puttjohnny says:

    I wonder how much increase to the cost electricity would be if the US had the estimated 20,000 to 40,000 and beyond PEV’s? I myself can not wait until the scientist perfect the hydrogen car where the hydrogen is produced without burning fossil fuel. Still the PEV are steps in the right direction.

    1. Jim says:

      Hydrogen is a scam, and you are just following the naysayers without putting any real research into it.

      The US has plenty of excess electrical capacity if we charge at night. The Volt even comes with a built in scheduled charger. With time of use billing, electricity that averages 12 cents/KWh will actually reduce in price to 4-6 cents/KWh. Making electric cars even cheaper to run, and allows electrical generating plants to be used at a higher capacity factor transfering revenue from OPEC to American Electric companies.

      Charging during the day, during a heat wave would be a bad thing for the electric grid. But even then some people have thrown out the idea of vehicle to grid to use the battery in electric cars to supplement power to the grid. I dont think it will happen.

      Once the electrification of transportation industry is well underway, All we need to do is replace coal fired power plants boilers with molten salt reactor cores to have clean carbon free power, But that is another rant for another day.

  11. John Hollenberg says:

    > And while 4,000 plug-in EVs sold a month doesn’t sound like a huge number…

    Are these plugins mostly kei cars? What brands?

    1. Jay Cole says:

      The bulk of plug-in vehicles in Japan come from two cars. The plug-in Prius and Nissan LEAF. As an example of the 3,800-odd plug-ins sold in April in Japan, the PIP and LEAF combined for 2,590.

      Most of the short term growth will come from the PIP in Japan that just went on sale in February. The uptake on it over the standard model is accelerating pretty fast and Toyota expects to sell (on the conservative side) 2,500 a month going forward.

  12. Koz says:

    Is the Volt sold in Japan? What do you feel inhibits it’s prospects there? Are there incentives offered to domestic plug-in’s that are not offered to imports?

    1. Jay Cole says:

      The Japanese have a real problem with American cars, they are petrified of the quality and service behind them, and the fact they are built in a way that just doesn’t translate over there…as in huge. Then there is the price, but I digress.

      The Chevrolet brand itself is recognized as kind of a nostalgia item, kind of like how we think of Tucker. In fact, because of this, GM sells a ton of bicycles (yes the peddle kind) with Chevrolet on them…but not so much with the cars.

      GM used to use other companies to import vehicles, but about a year ago they took all the business back in house, and thinned the offerings.

      GM Japan now basically consists of 7 cars.

      A lot of which are sold exclusively to the rich Japanese middle-age male demographic, namely the ‘high brand’ of Cadillac (CTS, SRX, Esclade) along with muscle cars, the Corvette and Camaro. Then you have your standard econoboxes GM tries to sell alongside, Captiva and Sonic. No Volt

      …sales are not good for GM in Japan to say the least.