6 ms·

I'm convinced that the Japanese government is terrified of EVs because all the small and medium-sized businesses which support the Japanese auto industry will b

I'm convinced that the Japanese government is terrified of EVs because all the small and medium-sized businesses which support the Japanese auto industry will be absolutely gutted when vehicles contain drastically fewer parts. That, and Japan is deeply screwed if they go all-in on EVs and then China decides they shouldn't be allowed access to any more rare earths.

jasonwatkinspdx 7mo ago
> China decides they shouldn't be allowed access to any more rare earths This is a common misunderstanding. There are plenty of alternative locations to mine rare earth minerals, particularly Australia. China cornered the market because it's a high pollution low margin business. If geopolitical concerns cut off access to Chinese sources, alternatives will be developed.
- putlake 7mo ago
  Mining isn't the only bottleneck with rare earths. There also the processing, which is an industry China has monopolized through sustained investments over decades. They have also improved processing efficiency through investments in technology. It's going to take a while for anyone else to catch up.
  - seanmcdirmid 7mo ago
    > There also the processing, which is an industry China has monopolized through sustained investments over decades. I don't think this is the right way to characterize it. China invested when other countries didn't, but they didn't monopolize the market, they have no moat beyond expertise and some tech advancement that could be replicated easily enough. The only moat they have is related perseverance and other countries simply not wanting to put the work in.
    - hangonhn 7mo ago
      I think they do have a moat because they dominate the supply chain not just in the raw material and processing but also in some of the actual technical experience, i.e. the experience of running such processing facilities, and also a monopoly on making the equipment that you need to build such a facility. They put export controls on those equipment and restricted their citizens who work in the rare earths industry from traveling aboard. Basically, if we want to replicate what they did, we will have to do it mostly from scratch -- Japan and Australia has done some of the work already so it's not totally from scratch. It's obviously not impossible but it could take almost a decade for us to do that. That said, I don't think this should be enough for Japan to stop investing in EVs. If Japanese car makers are really worried about this then they can build their plants in the US and leverage any deal the US has with China on real earths. They've already starting importing Japanese cars made in India and the US back to Japan so that's an established practice. Then once they've secured their own supplies they can make the EVs in Japan too. I think OP's point about the suppliers have more merit as a reason why Japan might not want to develop EVs.
      - fakedang 7mo ago
        I have worked with the Chinese REE industry, and we've often bumped heads and shared ideas together with them and I can confidently tell you, the Chinese don't use anything novel that has not been established in Western science already. What they do have is executing rarely-used techniques confidently at scale, but all of that is already often published in the West. The only reason the West hasn't done it is because these techniques are less profitable, and, surprise, the CCP actually forces processors to minimize ecological damage, which further bumps up the costs to the point only large-scale players can exist making such lower profits. You'll often find them using some obscure process alteration that was published minutely in the West. As an addendum, companies in the REE Sinosphere are often encouraged by the CCP to exchange ideas with each other quite often, while Western companies often lock them behind proprietary patents and competition. While both systems have their pros and cons, the former allows for faster process proliferation (and a lower profit incentive for the innovator).
        youarentrightjr 7mo ago
    - deleted 7mo ago
      [deleted]
    - tmnvix 7mo ago
      > they have no moat beyond expertise and some tech advancement See my sibling comment. Their moat is the scale and structure of their industry. Some parts of rare earth processing are dependent on that.
    - maxglute 7mo ago
      >they have no moat beyond expertise and some tech advancement that could be replicated easily enough Moat is decades of process / tactic knowledge built by disproportionate amount of talent on geologic formations others didn't invest in. Right now they generate 15x mining graduates, university of mining tech alone enrolls more than all US mining programs combined. Then you throw all that into a mining city like Batou with 3 million people running vertically integrated operation. That's ecosystem scale with compounded advantages beyond "wanting" to put work in, it maybe scale on PRC has demonstrated ability to produce. Between shallow kiddy pool and Mariana Trencth in terms of ease of replication, I wouldn't lean towards kiddy pool. I don't think "right way to characterize" their lead is "no moat" beyond... all the things that are actually, in fact very deep moats, as if any country can persevere their way to replicate decades of work and execute industrial policy of a 3 million large city dedicated to mining/rees. I surmise, PRC will build out EUV (technical problem) and produce them at scale before west+co meaningfully tackles HREEs supply chain (technical and regulatory and industrial problem).
    - eunos 7mo ago
      > they have no moat beyond expertise and some tech advancement that could be replicated easily enough Incorrect, de facto, the only firms invested heavily in the rare earth refineries technology are Chinese for the last 20-30 years. Their moats are as deep as TSMC moats so to say.
  - tmnvix 7mo ago
    As I understand it, some of these processes also require a sufficiently large industrial base to be even remotely economical due to a reliance on industrial 'byproduct' (for want of a better word). Because of this, some of these processes are not something that can be quickly stood up in isolation over a few years. It would take concerted large scale planning over a long time period - something the Chinese system of government is almost uniquely capable of.
  - fyrn_ 7mo ago
    Processing is the thing china does, you don't really mine rare earths, they are in many areas. Sure there are substrates it's easier to extract from, but the massive pollution of the processing that china was willing to accept when others were not that allowed them to corner the market. It can be done more cleanly, the US has some processing for strategic reasons (not enough though), but doing it clean is _very_ expensive. Lets hope the people modifying plants to concentrate elements make work.
  - rbanffy 7mo ago
    > an industry China has monopolized through sustained investments over decades. Well, well, well, if it isn't the consequences of everyone's own inaction...
- hangonhn 7mo ago
  Japan is also particularly well positioned because China had used rare earths against them first in 2014. Since then they've created basically a strategic rare earths reserve and done research on how to build some components without them. It's not an absolute solution but between this and future development in friendlier nations, I don't think the rare earth risk is as acute for Japanese automakers. I do think the original point about lower complexity vehicles being a threat to the suppliers has some merits though. Germany faces a very similar dilemma and made similar decisions.
- observationist 7mo ago
  There are also non rare earth magnets being explored. Niron - Iron nitride - magnets and ultrasonic compaction and other tech that wasn't feasible a while back are now becoming very practical. Japan could probably get to a dominant place with a solid research program, it'd give them a huge advantage for EVs and other motors.
  - wisplike 7mo ago
    Dont forget about good old externally excited motors like what Renault uses, no rare earths needed.
    - observationist 7mo ago
      Definitely, and new engineering around axial flux / pancake motors are getting really exciting. 1000 HP motors in a single wheel - https://yasa.com/news/yasa-smashes-own-unofficial-power-density-world-record-pushing-state-of-the-art-electric-motor-to-staggering-new-59kw-kg-benchmark/ https://yasa.com/news/yasa-smashes-own-unofficial-power-dens... Incredible what can be done. If Japan ever wants actual mecha warriors for their military, they're going to need motors like that.
UncleOxidant 7mo ago
But isn't Japan deeply screwed if they can't drastically cut their dependence on oil imports?
- piva00 7mo ago
  Also going to suffer a demographic crunch, having fewer jobs in more advanced technology would suit well with a shrunk labour force.
  - BrandoElFollito 7mo ago
    Not to mention how adverse they are to foreign workforce
jacquesm 7mo ago
Japan is the only other country besides China and Korea that produces magnets of high quality (higher in fact than the Chinese), they just don't do the volume. But there is absolutely no doubt that they could scale up if they wanted to. They're just more expensive, but not even that much.
- dyauspitr 7mo ago
  India is looking to produce 6000 tonnes of NdFeB magnets per year with the first batch coming out in mid 2026. This is great news because India has large rare earth reserves and are producing using the full supply chain of ore to oxide to magnets. 6000 tonnes is like 3% of the global supply but that’s not bad for year one.
  - jacquesm 7mo ago
    That's super good news, do you have any info on the name of the manufacturer?
    - dyauspitr 7mo ago
      IREL Limited and Sona Comstar. Trafalgar will be the first large scale NdFeB magnet plant looking to start production in 2027 https://www.fastmarkets.com/insights/trafalgar-sets-sights-on-rare-earth-magnet-plant-in-india/ https://www.fastmarkets.com/insights/trafalgar-sets-sights-o...
      - jacquesm 7mo ago
        Thank you, I will make someone super happy with this news.
- mullingitover 7mo ago
  They manufacture the magnets, but they don't produce the rare earths themselves. They're still getting something like 60-70% of their supply from China.
bko 7mo ago
Or they're unprofitable and highly competitive. Ford: It recorded a loss of $1.2 billion in EBIT in the third quarter on its EVs, bringing its losses on the segment for the first three quarters of 2024 to $3.7 billion Honda: Honda to Write Off $15.7 Billion as EV Winter Arrives. https://www.reuters.com/business/autos-transportation/ford-reports-fall-third-quarter-profit-2024-10-28/ https://www.reuters.com/business/autos-transportation/ford-r... https://www.barrons.com/articles/gm-stock-general-motors-investor-day-a1fc5217 https://www.barrons.com/articles/gm-stock-general-motors-inv... https://www.barrons.com/articles/honda-to-write-off-15-7-billion-ev-winter-arrives-aa95d112 https://www.barrons.com/articles/honda-to-write-off-15-7-bil...
- manoDev 7mo ago
  That projection won't last in a world where Brent Oil @ $100. That was only true while the petrodollars kept flowing.
  - grumbelbart2 7mo ago
    It's also not representative for the whole industry. BMW is profitable with their electric cars, and 18% of their sales are fully electric.
parl_match 7mo ago
> I'm convinced that the Japanese government is terrified of EVs because all the small and medium-sized businesses which support the Japanese auto industry will be absolutely gutted when vehicles contain drastically fewer parts. For what it's worth, this theory is blown up by hydrogen based vehicles, which Japan has gone heavily in on. Yes, slightly more parts than an EV, but not a ton. And the drivetrain is electric.
- mjcarden 7mo ago
  Is there a place somewhere in the world where Hydrogen powered passenger vehicles are a success? I know that the one Hydrogen filling station here in Australia's Capital City has shut down after opening with great fanfare a few years ago. And the approximately 20 or so Hydrogen cars it supplied are no longer being used.
  - arlcode 7mo ago
    I just looked it up for Germany[0] and there were a whopping 3 (0.0%) new hydrogen fuel cell cars registered in Februrary 2026. Even LPG cars were more with 397 registered. For comparison 21.9% were BEVs, 11.5% Plugin hybrids, ~51% pure petrol or non plug-in hybrid, and 14.8% Diesel. [0] https://www.kba.de/DE/Presse/Pressemitteilungen/Fahrzeugzulassungen/2026/pm11_2026_n_02_26_pm_komplett.html https://www.kba.de/DE/Presse/Pressemitteilungen/Fahrzeugzula...
    - qalmakka 7mo ago
      LPG isn't a good metric of a "weird" fuel, there are countries such as Italy where it's immensely popular
- SenHeng 7mo ago
  It really shows the bias in Honda’s management here. They’ve also spent years trying to develop and promote their hydrogen fuel cell cars and it’s just as much of a failure as their EV division yet they aren’t axing that golden child.
manoDev 7mo ago
Japan is just being the usual USA vassal. Since now China absolutely dominates EV and batteries, they rather align themselves with the oil-thirsty war monger.
8ytecoder 7mo ago
China already did, in 2010, against Japan. Japan has been preparing alternatives for a decade and a half now. https://www.economist.com/asia/2025/12/04/lessons-from-japans-efforts-to-wean-itself-off-chinese-rare-earths https://www.economist.com/asia/2025/12/04/lessons-from-japan...
TexanFeller 7mo ago
Toyota just had three large EV announcements and they are putting large incentives on some of them. Feels like they're serious about it and with so many others exiting the EV market lately they may have timed it well.
pezezin 7mo ago
I live in Japan and IMHO the problem is that it is an extremely conservative and risk averse country, "if it ain't broke don't fix it" taken to the extreme. They had a period of innovation after WW2 out of necessity, but after the bubble crash of 1990 they reverted back to their old selves.
rbanffy 7mo ago
> all the small and medium-sized businesses which support the Japanese auto industry will be absolutely gutted when vehicles contain drastically fewer parts. EVs have lots of the same parts as an ICEV - the differences are engine and power systems, fuel tank, transmission... Most of the car is still there. There is a lot of churn - lead-acid is out, fuel injection, sensors are different and sense different things, and so on, but it's still a car.
skybrian 7mo ago
I've read that the Japanese electrical grid would be hard to upgrade to charge lots of electric vehicles, and that somewhat explains their enthusiasm for hydrogen.

jasonwatkinspdx 7mo ago

> China decides they shouldn't be allowed access to any more rare earths This is a common misunderstanding. There are plenty of alternative locations to mine rare earth minerals, particularly Australia. China cornered the market because it's a high pollution low margin business. If geopolitical concerns cut off access to Chinese sources, alternatives will be developed.

putlake 7mo ago
Mining isn't the only bottleneck with rare earths. There also the processing, which is an industry China has monopolized through sustained investments over decades. They have also improved processing efficiency through investments in technology. It's going to take a while for anyone else to catch up.
- seanmcdirmid 7mo ago
  > There also the processing, which is an industry China has monopolized through sustained investments over decades. I don't think this is the right way to characterize it. China invested when other countries didn't, but they didn't monopolize the market, they have no moat beyond expertise and some tech advancement that could be replicated easily enough. The only moat they have is related perseverance and other countries simply not wanting to put the work in.
  - hangonhn 7mo ago
    I think they do have a moat because they dominate the supply chain not just in the raw material and processing but also in some of the actual technical experience, i.e. the experience of running such processing facilities, and also a monopoly on making the equipment that you need to build such a facility. They put export controls on those equipment and restricted their citizens who work in the rare earths industry from traveling aboard. Basically, if we want to replicate what they did, we will have to do it mostly from scratch -- Japan and Australia has done some of the work already so it's not totally from scratch. It's obviously not impossible but it could take almost a decade for us to do that. That said, I don't think this should be enough for Japan to stop investing in EVs. If Japanese car makers are really worried about this then they can build their plants in the US and leverage any deal the US has with China on real earths. They've already starting importing Japanese cars made in India and the US back to Japan so that's an established practice. Then once they've secured their own supplies they can make the EVs in Japan too. I think OP's point about the suppliers have more merit as a reason why Japan might not want to develop EVs.
    - fakedang 7mo ago
      I have worked with the Chinese REE industry, and we've often bumped heads and shared ideas together with them and I can confidently tell you, the Chinese don't use anything novel that has not been established in Western science already. What they do have is executing rarely-used techniques confidently at scale, but all of that is already often published in the West. The only reason the West hasn't done it is because these techniques are less profitable, and, surprise, the CCP actually forces processors to minimize ecological damage, which further bumps up the costs to the point only large-scale players can exist making such lower profits. You'll often find them using some obscure process alteration that was published minutely in the West. As an addendum, companies in the REE Sinosphere are often encouraged by the CCP to exchange ideas with each other quite often, while Western companies often lock them behind proprietary patents and competition. While both systems have their pros and cons, the former allows for faster process proliferation (and a lower profit incentive for the innovator).
      - youarentrightjr 7mo ago
  - deleted 7mo ago
    [deleted]
  - tmnvix 7mo ago
    > they have no moat beyond expertise and some tech advancement See my sibling comment. Their moat is the scale and structure of their industry. Some parts of rare earth processing are dependent on that.
  - maxglute 7mo ago
    >they have no moat beyond expertise and some tech advancement that could be replicated easily enough Moat is decades of process / tactic knowledge built by disproportionate amount of talent on geologic formations others didn't invest in. Right now they generate 15x mining graduates, university of mining tech alone enrolls more than all US mining programs combined. Then you throw all that into a mining city like Batou with 3 million people running vertically integrated operation. That's ecosystem scale with compounded advantages beyond "wanting" to put work in, it maybe scale on PRC has demonstrated ability to produce. Between shallow kiddy pool and Mariana Trencth in terms of ease of replication, I wouldn't lean towards kiddy pool. I don't think "right way to characterize" their lead is "no moat" beyond... all the things that are actually, in fact very deep moats, as if any country can persevere their way to replicate decades of work and execute industrial policy of a 3 million large city dedicated to mining/rees. I surmise, PRC will build out EUV (technical problem) and produce them at scale before west+co meaningfully tackles HREEs supply chain (technical and regulatory and industrial problem).
  - eunos 7mo ago
    > they have no moat beyond expertise and some tech advancement that could be replicated easily enough Incorrect, de facto, the only firms invested heavily in the rare earth refineries technology are Chinese for the last 20-30 years. Their moats are as deep as TSMC moats so to say.
- tmnvix 7mo ago
  As I understand it, some of these processes also require a sufficiently large industrial base to be even remotely economical due to a reliance on industrial 'byproduct' (for want of a better word). Because of this, some of these processes are not something that can be quickly stood up in isolation over a few years. It would take concerted large scale planning over a long time period - something the Chinese system of government is almost uniquely capable of.
- fyrn_ 7mo ago
  Processing is the thing china does, you don't really mine rare earths, they are in many areas. Sure there are substrates it's easier to extract from, but the massive pollution of the processing that china was willing to accept when others were not that allowed them to corner the market. It can be done more cleanly, the US has some processing for strategic reasons (not enough though), but doing it clean is _very_ expensive. Lets hope the people modifying plants to concentrate elements make work.
- rbanffy 7mo ago
  > an industry China has monopolized through sustained investments over decades. Well, well, well, if it isn't the consequences of everyone's own inaction...
hangonhn 7mo ago
Japan is also particularly well positioned because China had used rare earths against them first in 2014. Since then they've created basically a strategic rare earths reserve and done research on how to build some components without them. It's not an absolute solution but between this and future development in friendlier nations, I don't think the rare earth risk is as acute for Japanese automakers. I do think the original point about lower complexity vehicles being a threat to the suppliers has some merits though. Germany faces a very similar dilemma and made similar decisions.
observationist 7mo ago
There are also non rare earth magnets being explored. Niron - Iron nitride - magnets and ultrasonic compaction and other tech that wasn't feasible a while back are now becoming very practical. Japan could probably get to a dominant place with a solid research program, it'd give them a huge advantage for EVs and other motors.
- wisplike 7mo ago
  Dont forget about good old externally excited motors like what Renault uses, no rare earths needed.
  - observationist 7mo ago
    Definitely, and new engineering around axial flux / pancake motors are getting really exciting. 1000 HP motors in a single wheel - https://yasa.com/news/yasa-smashes-own-unofficial-power-density-world-record-pushing-state-of-the-art-electric-motor-to-staggering-new-59kw-kg-benchmark/ https://yasa.com/news/yasa-smashes-own-unofficial-power-dens... Incredible what can be done. If Japan ever wants actual mecha warriors for their military, they're going to need motors like that.

UncleOxidant 7mo ago

But isn't Japan deeply screwed if they can't drastically cut their dependence on oil imports?

piva00 7mo ago
Also going to suffer a demographic crunch, having fewer jobs in more advanced technology would suit well with a shrunk labour force.
- BrandoElFollito 7mo ago
  Not to mention how adverse they are to foreign workforce

jacquesm 7mo ago

Japan is the only other country besides China and Korea that produces magnets of high quality (higher in fact than the Chinese), they just don't do the volume. But there is absolutely no doubt that they could scale up if they wanted to. They're just more expensive, but not even that much.

dyauspitr 7mo ago
India is looking to produce 6000 tonnes of NdFeB magnets per year with the first batch coming out in mid 2026. This is great news because India has large rare earth reserves and are producing using the full supply chain of ore to oxide to magnets. 6000 tonnes is like 3% of the global supply but that’s not bad for year one.
- jacquesm 7mo ago
  That's super good news, do you have any info on the name of the manufacturer?
  - dyauspitr 7mo ago
    IREL Limited and Sona Comstar. Trafalgar will be the first large scale NdFeB magnet plant looking to start production in 2027 https://www.fastmarkets.com/insights/trafalgar-sets-sights-on-rare-earth-magnet-plant-in-india/ https://www.fastmarkets.com/insights/trafalgar-sets-sights-o...
    - jacquesm 7mo ago
      Thank you, I will make someone super happy with this news.
mullingitover 7mo ago
They manufacture the magnets, but they don't produce the rare earths themselves. They're still getting something like 60-70% of their supply from China.

bko 7mo ago

Or they're unprofitable and highly competitive. Ford: It recorded a loss of $1.2 billion in EBIT in the third quarter on its EVs, bringing its losses on the segment for the first three quarters of 2024 to $3.7 billion Honda: Honda to Write Off $15.7 Billion as EV Winter Arrives. https://www.reuters.com/business/autos-transportation/ford-reports-fall-third-quarter-profit-2024-10-28/ https://www.reuters.com/business/autos-transportation/ford-r... https://www.barrons.com/articles/gm-stock-general-motors-investor-day-a1fc5217 https://www.barrons.com/articles/gm-stock-general-motors-inv... https://www.barrons.com/articles/honda-to-write-off-15-7-billion-ev-winter-arrives-aa95d112 https://www.barrons.com/articles/honda-to-write-off-15-7-bil...

manoDev 7mo ago
That projection won't last in a world where Brent Oil @ $100. That was only true while the petrodollars kept flowing.
- grumbelbart2 7mo ago
  It's also not representative for the whole industry. BMW is profitable with their electric cars, and 18% of their sales are fully electric.

parl_match 7mo ago

> I'm convinced that the Japanese government is terrified of EVs because all the small and medium-sized businesses which support the Japanese auto industry will be absolutely gutted when vehicles contain drastically fewer parts. For what it's worth, this theory is blown up by hydrogen based vehicles, which Japan has gone heavily in on. Yes, slightly more parts than an EV, but not a ton. And the drivetrain is electric.

mjcarden 7mo ago
Is there a place somewhere in the world where Hydrogen powered passenger vehicles are a success? I know that the one Hydrogen filling station here in Australia's Capital City has shut down after opening with great fanfare a few years ago. And the approximately 20 or so Hydrogen cars it supplied are no longer being used.
- arlcode 7mo ago
  I just looked it up for Germany[0] and there were a whopping 3 (0.0%) new hydrogen fuel cell cars registered in Februrary 2026. Even LPG cars were more with 397 registered. For comparison 21.9% were BEVs, 11.5% Plugin hybrids, ~51% pure petrol or non plug-in hybrid, and 14.8% Diesel. [0] https://www.kba.de/DE/Presse/Pressemitteilungen/Fahrzeugzulassungen/2026/pm11_2026_n_02_26_pm_komplett.html https://www.kba.de/DE/Presse/Pressemitteilungen/Fahrzeugzula...
  - qalmakka 7mo ago
    LPG isn't a good metric of a "weird" fuel, there are countries such as Italy where it's immensely popular
SenHeng 7mo ago
It really shows the bias in Honda’s management here. They’ve also spent years trying to develop and promote their hydrogen fuel cell cars and it’s just as much of a failure as their EV division yet they aren’t axing that golden child.

manoDev 7mo ago

Japan is just being the usual USA vassal. Since now China absolutely dominates EV and batteries, they rather align themselves with the oil-thirsty war monger.

8ytecoder 7mo ago

China already did, in 2010, against Japan. Japan has been preparing alternatives for a decade and a half now. https://www.economist.com/asia/2025/12/04/lessons-from-japans-efforts-to-wean-itself-off-chinese-rare-earths https://www.economist.com/asia/2025/12/04/lessons-from-japan...

TexanFeller 7mo ago

Toyota just had three large EV announcements and they are putting large incentives on some of them. Feels like they're serious about it and with so many others exiting the EV market lately they may have timed it well.

pezezin 7mo ago

I live in Japan and IMHO the problem is that it is an extremely conservative and risk averse country, "if it ain't broke don't fix it" taken to the extreme. They had a period of innovation after WW2 out of necessity, but after the bubble crash of 1990 they reverted back to their old selves.

rbanffy 7mo ago

> all the small and medium-sized businesses which support the Japanese auto industry will be absolutely gutted when vehicles contain drastically fewer parts. EVs have lots of the same parts as an ICEV - the differences are engine and power systems, fuel tank, transmission... Most of the car is still there. There is a lot of churn - lead-acid is out, fuel injection, sensors are different and sense different things, and so on, but it's still a car.

skybrian 7mo ago

I've read that the Japanese electrical grid would be hard to upgrade to charge lots of electric vehicles, and that somewhat explains their enthusiasm for hydrogen.