Japan’s fuel efficiency standards to be modified to include EVs, plug-in hybrids

  • Automotive
  • Science and Technology Policy Japan

Japan’s fuel efficiency standards to be modified to include EVs, plug-in hybrids

The government intends to modify the fuel efficiency standards so that electric vehicles and plug-in hybrids will also be subject to tax assessments, The Yomiuri Shimbun has learned.

It hopes that by establishing environmental standards that such models should meet, carmakers will be motivated to develop more EVs and other environmentally friendly vehicles, sources said.

The move will likely affect how car taxes are calculated. For this reason, automakers are expected to compete fiercely to develop new models that can meet the envisaged criteria.

The government set the current standards to urge automakers to achieve fuel efficiency goals, as part of measures against global warming. They took effect in fiscal 2011 and are known as the “fiscal 2020 standards” because the aim is to achieve them by that fiscal year.

Under the current standards, mainly gasoline-powered vehicles and hybrid models are subject to reduced taxes. In the case of a 1.5-ton gasoline-powered car, it must drive at least 17.6 kilometers on a liter of gasoline to meet the standards. Though many vehicles already meet the criteria, the government plans to set higher fuel efficiency levels for gasoline-powered vehicles and other models, sources said.

The new standards are expected to be compiled as early as this spring after discussions by expert panels of the Land, Infrastructure, Transport and Tourism Ministry and the Economy, Trade and Industry Ministry.

The target year for achieving the new standards will likely be from fiscal 2027 to fiscal 2030, according to sources.

In the case of EVs, the government will set the environmental standards based on figures such as one calculated by multiplying the electric power consumption rate — the amount of electricity required to drive 1 kilometer — with a certain coefficient to convert the rate into an equivalent amount of gasoline.

EVs and PHVs are being included in the new standards because they are expected to be used widely in the future.

Currently, about 10 EV and about 20 PHV models are sold nationwide. New car sales of EVs and PHVs in fiscal 2017 were about 60,000 units. The figure accounts for only about 1 percent of new car sales, but is the double the amount sold in fiscal 2016.

Automakers will be required to sell a certain number of vehicles that meet the new standards by a predetermined fiscal year.

Improving the electric power consumption rate will require reducing the weight of vehicle bodies and improving batteries.

The government, for its part, hopes to spur technological development at carmakers by calling for high standards of environmental performance, according to the sources.

The fuel efficiency standards are also used in deciding the amount of taxes that users pay for their cars. They pay less when their cars have better fuel efficiency. This applies to such tax systems as the eco-car tax break system, which reduces the automobile weight tax, and the environmental performance tax system, which will be imposed on vehicle purchases from October.

Under the eco-car tax breaks and environmental performance tax system, all the EV and PHV models are exempt from taxes.

Under the new standards, such models will be required to meet even higher environmental criteria. EV and PHV models will likely be strictly divided by level of performance when the new standards are applied to determine tax reduction rates.

Meanwhile, it is also possible that the new fuel efficiency standards will be applied to the automobile tax, the rate of which changes depending on the amount of engine displacement. Currently, zero-exhaust EVs are in the same category as vehicles classified as emitting the lowest amount of exhaust.

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Publication Date
Sat, 01/26/2019 - 18:48