The Japanese government is planning to promote the used electric vehicles (EVs) market in order to establish a system for recycling batteries used in EVs. This initiative comes as a response to concerns about the outflow of critical minerals from Japan. Currently, Japan imports these minerals, which are essential for battery production, from China and other countries. However, approximately 80% of used EVs are exported, resulting in the minerals flowing back out of the country.
To enhance economic security and encourage the domestic circulation of used EVs and their batteries, the government intends to introduce a service that guarantees the performance of used batteries. The Ministry of Economy, Trade and Industry will collaborate with private sector entities to develop a market for used EVs and promote secondary battery usage.
One key aspect of this plan is the introduction of an insurance policy for EVs that guarantees battery performance. Non-life insurance companies will offer this policy starting in September. Battery manufacturers will evaluate the condition of batteries, and if they deteriorate during the warranty period, replacement batteries or even whole vehicle replacements will be covered by the policy. The insurance is expected to be sold to used car dealers at premiums ranging from ¥20,000-¥30,000 per unit.
Additionally, Japan aims to repurpose deteriorated EV batteries for use in golf carts and other small vehicles. This strategy not only reduces waste but also ensures continued utilization even after their primary function has diminished.
The government’s decision comes at a time when China’s export restrictions on graphite have caused instability in Japan’s supply chain for battery production materials. Furthermore, due to difficulties in determining battery deterioration status accurately compared to hybrid or conventional vehicles, prices of used EVs tend to decline rapidly leading most sales occurring overseas.
To support this initiative further,the Ministry has selected recipients such as Prime Planet Energy & Solutions Inc., Yamaha Motor Co., and SOMPO Holdings Inc., who will receive subsidies covering up two-thirds of feasibility trial costs.
With its target set on electrifying all new passenger car sales by 2035 including hybrids,the Japanese government estimates that if it can establish a circular model for all used EV batteries within its borders,the related market would be worth approximately ¥600 billion by 2030,and around ¥8 trillion by 2050 according estimates made by The Japan Research Institute Ltd.