A record 88,535 electric vehicles were sold in Japan last year, accounting for 2.2% of all new passenger car sales. But green alternatives to combustion-engine vehicles continue to struggle to attract consumers in the world's fourth-largest auto market.

Sales of the electric version of Japan's iconic lightweight compact car were 43,991 units sold in 2023, according to data released Thursday by the Japan Automobile Dealers Association and the Japan Light Motor Vehicle and Motorcycle Association. The share of electric vehicles in total vehicle sales (standard-size cars) was 1.7% and 3.3% for light-duty vehicles, up from 1.4% and 2.2% in 2022.

Overall, EV sales in 2023 are up 50% from 58,813 units in the previous year.

Among domestic manufacturers, Nissan topped EV sales with 54,800 units, 68 percent of which were the light-duty Sakura. mitsubishi Motors followed with 7,021 eK X EVs. Mitsubishi Motors followed with 7,021 eK X electric vehicles, while Toyota ranked third with 2,929 vehicles.

Sales of imported EVs totaled 22,848 units. China's BYD, which debuted in the Japanese market last year and now offers two EV models, sold 1,446 units, according to the Japan Automobile Importers Association.

Sales of standard-size passenger cars totaled 2.7 million units by 2023, up 19 percent from a year earlier, as automakers recovered from an earlier chip shortage that hampered production. Hybrids have the largest share, accounting for 55 percent of sales, or 1.5 million units. Gasoline vehicles accounted for 36 percent of sales.

Driving EV sales in Japan remains difficult because hybrids are meeting consumer demand that would otherwise shift to EVs, and the market is dominated by domestic automakers that sell few EVs," said Shinya Naruse, an analyst at Okasan Securities in Tokyo. " . "Charging infrastructure is developing slowly, and most consumers are still unclear about the benefits of buying an electric car," Naruse said.

Naruse said government subsidies for electric cars and charging stations will continue to incentivize buyers. But he said sales growth will be "gradual" compared with other regions such as the U.S. and Europe, where governments are fostering the auto industry through regulations that promote electric vehicle sales.

Sales of electric vehicles also grew in other parts of Asia last year, according to the industry group. In China, the world's largest auto market, 5.9 million electric vehicles were sold in the January-November period, up 24 percent from a year earlier, accounting for 25 percent of total passenger car sales. In India, 86,870 EVs were sold during the same period, double the previous year's figure and accounting for 2.5% of the country's total sales.

In Indonesia, EV sales reached about 13,800 units in the past 11 months, up 75% year-on-year. Thailand's EV sales have also increased seven-fold over the same period.

"The priority for Japanese companies is not to sell EVs domestically, but in the U.S. and China, where there is more policy support," Narusha said. While demand for electric cars seems to have peaked due to limited affordable offerings, "these companies are facing tougher competition in these markets."

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