Bad Law, Where Massive Blood Taxes Are Being Used To Popularize Electric Vehicles
I don't agree that taxes are being raised on older cars.
Nissan’s Sakura (left) and Mitsubishi’s eK X EV. NMKV, a joint venture between the two companies, is leading the development/photo by AfroHonda announced that all new cars will be electric and fuel cell vehicles by 2040. The company plans to install no engines, including hybrids. Foreign markets and manufacturers have been particularly aggressive in promoting electric vehicles, and Japan is responding.
Japanese manufacturers have also recently announced new electric vehicles, including the Nissan Ariya, Toyota bZ4X & Subaru Solterra, as well as the Nissan Sakura & Mitsubishi eK X EV micro-mini cars, for the period 2021 to 2022.
Of these, the Nissan Sakura & Mitsubishi eK X EV minicars are the most noteworthy. Kei cars have a low tax rate and most models are developed for the domestic market, so their design and functions are likely to resonate well with Japanese users.
For this reason, kei cars accounted for 38% of all four-wheeled vehicles sold in Japan in 2022. Many kei cars also line up at the top of the domestic sales ranking. The Honda N-BOX, Suzuki Spacia, and Daihatsu Tanto are staples of the top sales ranking.
Electric cars and mini cars also go hand in hand. As mentioned above, electric vehicles have the advantage of reducing environmental impact, but they also have the disadvantage of a short driving distance on a single charge. To overcome this and increase the driving range, the lithium-ion batteries used to drive the vehicle must be larger.
However, the production of lithium-ion batteries emits carbon dioxide, so increasing the size of the batteries will further increase their environmental impact. The larger the battery, the heavier the body will be, and the motor will need to be strengthened. This also increases power consumption. As described above, extending the distance that can be traveled on a single charge will also increase carbon dioxide emissions, thus defeating the purpose of reducing environmental impact. Of course, the price will also increase.
In this respect, light cars are unlikely to experience any inconvenience even if the distance they can travel on a single charge is short. This is because light cars are mainly used for urban transportation, taking advantage of their small body. A person goes out for work in the morning and recharges the battery when he returns home. In the afternoon, they go shopping again and recharge the battery when they return. With this kind of usage, there is no need to drive a long distance on a single charge.
Households with multiple cars can use a light electric vehicle as a second car, and use the first car for long-distance trips. For this use, it is sufficient to be able to drive about 100 km on a single charge. Therefore, Sakura and eK X EV have a driving distance of 180 km (WLTC mode) on a single charge.
Incidentally, this second-car usage is difficult to achieve with the LEAF, Aryia, bZ4X, and other 3-number-size electric vehicles. The LEAF’s body is relatively compact, but it is still too large to be used as a second car for city driving. It is also expensive.
In this respect, mini cars can be used as second cars and avoid the drawback that electric cars have a short driving range and are relatively expensive. Kei cars are the best category to promote electric vehicles in Japan.
This situation has led to steady growth in sales of the Sakura and eK X EV. It was announced that 11,000 units of Sakura and 3,400 units of eK X EV were ordered within three weeks and one month, respectively, after the start of advance orders.
Sales of the LEAF in 2021 are averaging a little over 900 units per month. In Japan, about 40% of all households live in apartment complexes, and it is difficult to install recharging facilities at home. Considering this, the number of orders for Sakura and eK X EVs will be a focus of attention.
The Ministry of Economy, Trade, and Industry (METI) is providing subsidies to help promote the Sakura and eK X EVs. The Ministry of Economy, Trade, and Industry (METI) has granted a subsidy of 550,000 yen. The price of the X, which is in the middle class of the Sakura lineup, is 2,399,100 yen, so subtracting the 550,000 yen subsidy, the price would be 1,849,100 yen.
These real prices are comparable to those of the Nissan Rook Highway Star X ProPilot Edition and Mitsubishi eK X Space T. By taking advantage of the subsidy, one can obtain an electric vehicle of the same size for the same cost as a high-end grade of a standard minicar.
In Tokyo, the subsidy is 450,000 yen, regardless of the price of the electric vehicle or plug-in hybrid. If the subsidy were to be granted, the total amount would reach 1 million yen, including 550,000 yen from the Ministry of Economy, Trade, and Industry. For the Sakura X, the vehicle price is 2,399,100 yen, but the actual price after the subsidy is 1,399,100 yen. Since it is available at the same cost as the basic X of the Days, as mentioned above, the number of orders received has skyrocketed.
“However, the subsidy ends when the budget is used up. What are the prospects for the future? We inquired at a Nissan dealership in Tokyo about the future outlook, including delivery dates. The Ministry of Economy, Trade and Industry (METI) and the Tokyo Metropolitan Government (TMG) both expect the subsidies to end around October 2022, although it is difficult to know how the subsidies will be used. And the delivery date for Sakura is also October to November for a contract signed in late June, so it’s not clear whether we will be able to receive the subsidy immediately after the purchase,” he said.
What happens if the subsidy budget is used up in October and the grant ends, and the registration is made in November? Since registration is a requirement for applying for subsidies, it is not possible to apply before registration. We asked the Next Generation Vehicle Promotion Center, which handles subsidies for the Ministry of Economy, Trade and Industry, about this point.
They said, “We don’t know if the budget is approved and similar subsidies are implemented in the next fiscal year, there is a possibility that we will be able to receive the subsidies, but if the budget is not approved, we will not be able to receive the subsidies. Even if the budget is passed, there is a possibility that the subsidy amount will be reduced.”
In the case of Sakura and eK X EV, the subsidy from METI is 550,000 yen, to which is added the subsidy from the local government, so the difference between receiving the subsidy and not is significant. Looking back at the past history of the subsidy, it is likely that the subsidy will continue in the future, but the amount to be granted will likely decrease. This is because the purpose of the subsidies is to promote the spread of the product, and as this progresses, the amount of subsidies will be reduced.
If this happens, orders are strong at the moment, but sales may plummet if the subsidies are not met in time. We asked a Nissan dealer how to deal with this.
They replied, “Right now, delivery times for new cars in general, including electric cars, are long. That’s why the LEAF and Ariya will likely be delivered in October or November if they are contracted in late June. The subsidy amount for electric vehicles is as high as 550,000 to 850,000 yen, so if they do not receive the subsidy, it will be a rather expensive purchase. If the subsidy is terminated, it is impossible for the sales company to cover the cost of the subsidy, so an increasing number of customers have recently been putting off their purchases, fearing a delay in delivery.”
Currently, it is becoming more difficult to purchase electric vehicles, and not just mini cars. The plug-in hybrid Outlander and Prius PHV will also receive a similar subsidy of 550,000 yen from the Ministry of Economy, Trade and Industry. This would make it difficult to buy plug-in hybrids as the end of the subsidy approaches. With the appearance of the Sakura and eK X EV, it seemed that electric vehicles would spread quickly, but future trends are uncertain.
There is also the problem of the subsidy system, which ends when the budget is exhausted. The government says, “It is natural that the subsidies end when the budget is used up,” but electric vehicles are not equipment purchased by companies. They are products bought by ordinary users, in other words, amateurs, so care must be taken to avoid confusion when subsidies are given.
It is also important to know the other side of subsidies. Because the subsidies are based on a budget, some cruel things are done in order to raise the money.
One example is the tax increase on older cars. Diesel engine cars are subject to higher taxes after 11 years of first registration, and gasoline engine cars after 13 years, and the automobile tax on gasoline engine cars increases by about 15%. The light automobile tax will be increased to nearly double the amount. The automobile weight tax will also be increased in two stages, 13 years after first registration and another 18 years.
In areas where public transportation is underdeveloped, elderly people use old cars for hospital visits and shopping. Now, due to the new coronavirus, income has decreased and more users have no choice but to continue using their old cars. The current automobile tax system is designed to take a large amount of tax money from these people.
And tax breaks and subsidies for electric vehicles are built on top of higher taxes that further hurt the financially strapped users. The government’s argument is that electric vehicles with superior environmental performance should be promoted through subsidies and other means, and the loss should be borne by users of older vehicles with inferior environmental performance. This will encourage people to replace their old cars with new ones that have superior environmental performance.
In exchange for such a “bad law” is a large subsidy for the purchase of electric vehicles. Is it really necessary to create suffering and misery in order to promote the spread of electric vehicles?
Interview and text： Yoichiro Watanabe
Born in 1961. After working as editor-in-chief of a monthly automobile magazine for about 10 years, he became a freelance car life journalist in 2001. He believes that the most important theme is "not to cause injury or loss to readers," and tries to write articles that raise issues from the viewpoint of people who use cars. He writes not only about test drives, vehicle introductions, and mechanical descriptions, but also about pricing, grade configurations, resale value, discounts, insurance, and taxes, as well as other matters related to car life in general. He also writes about car history.
