Japan’s automakers, long profiting from their dominance in energy-efficient vehicles, now face their greatest challenge in the era of new energy vehicles (NEVs).

NEVs, characterized by extreme energy efficiency and high intelligence, present two insurmountable peaks for Japan’s traditionally dominant automakers.

Amid fears of being ousted from the Chinese market, Honda recently announced its demonstration production line for solid-state batteries with a total investment of ¥43 billion.

This facility covers the entire process, from electrode material mixing to coating, rolling, and assembling battery modules. Toyota and Nissan have also unveiled their solid-state battery production plans, marking a turning point in Japan's fight to regain global automotive leadership.

These batteries, seen as an "atomic bomb" aimed at China’s automotive industry, could potentially upend the dominance China has established in the global NEV market.

Joining this "atomic bomb" is Japan’s concerted national effort to build an all-encompassing solid-state battery corps for NEVs.

China’s Rapid NEV Expansion vs. Japan’s Strategic Retaliation

As China’s NEV market surges to global prominence, with rapid growth and expanding exports, some traditional giants like Volkswagen have struggled to keep pace.

Now collaborating with Chinese brands such as XPeng and SAIC, Volkswagen has shifted its focus to creating China-specific smart electric vehicles.

In the fierce competition between BYD's LFP batteries and CATL's NMC technology, Japanese automakers have acknowledged their current limitations, cautiously integrating Chinese batteries into their supply chains.

However, these moves only mark the beginning of their strategic comeback. Japan’s automotive industry, once a global leader in lithium battery technology, now stakes its survival on regaining this critical advantage.

Toyota, Honda, and Nissan have made solid-state batteries the cornerstone of their strategies, targeting commercial production by 2027.

Japan’s comprehensive battery capacity plans—expected to reach 600 GWh globally and 150 GWh domestically by 2030—are set to alarm automakers worldwide.

Strategic Plans Backed by Japan’s Government

Japan’s Ministry of Economy, Trade, and Industry (METI) has outlined an ambitious mid-term power battery strategy under its "Battery Supply Assurance Plan."

Between 2025 and 2028, Japan plans to increase domestic battery production capacity by 81.5 GWh, with a total investment of ¥1.7087 trillion, including ¥602.5 billion in government subsidies.

Key projects include:

Mazda (Panasonic): Cylindrical lithium batteries for vehicles, annual capacity of 6.5 GWh, production starting in July 2025, total investment of 83.3 billion yen, government subsidy of 28.3 billion yen.

Toyota: Batteries for BEVs and next-generation vehicles, annual capacity of 25 GWh, production starting in October 2026, total investment of 330 billion yen, government subsidy of 117.8 billion yen.

Toyota: Prismatic batteries and solid-state materials, annual capacity of 9 GWh, production starting in November 2026, total investment of 245 billion yen, government subsidy of 85.6 billion yen.

Honda (GS): Lithium batteries for vehicles and stationary storage, annual capacity of 20 GWh, production starting in April 2027, total investment of 434.1 billion yen, government subsidy of 158.7 billion yen.

Nissan: Batteries for next-generation BEVs, annual capacity of 5 GWh, production starting in July 2028, total investment of 153.3 billion yen, government subsidy of 55.7 billion yen.

Subaru (Panasonic): Cylindrical lithium batteries for vehicles, annual capacity of 16 GWh, production starting in August 2028, total investment of 463 billion yen, government subsidy of 156.4 billion yen.

Meanwhile, Chinese industry leaders like BYD have already reached annual NEV sales of over 3 million units and battery production volumes exceeding 170 GWh as of 2024. Yet, Japan’s focus on solid-state batteries is poised to challenge this lead.

Solid-State Batteries: Japan’s Last Stand or Future Victory?

Solid-state batteries, heralded as the "crown jewel" of NEVs, offer unparalleled safety, rapid charging, and high energy density.

Although their initial costs are high, Japan's automotive brands boast world-class manufacturing and quality standards, reinforcing their competitive edge.

Despite significant advancements, Chinese automakers cannot afford complacency. Solid-state battery pioneers like CATL, GAC, and Dongfeng have accelerated development and plan to launch products by 2025.

However, Japan’s ability to roll out these technologies at scale—leveraging decades of automotive dominance—could disrupt the current NEV market order.

A Race Against Time: From Batteries to Comprehensive Automotive Overhauls

Japan’s automakers are not limiting themselves to solid-state batteries. Toyota’s forthcoming "super engine" and next-gen battery, set for 2026, promise transformative gains, potentially echoing the innovations of BYD’s DM-i hybrid systems.

Moreover, Japan’s advancements in hydrogen fuel cell technologies and hybrid powertrains could redefine NEV performance and efficiency.

China’s NEV industry has spent over a decade achieving global leadership through plug-in hybrids, NMC, and LFP battery technologies.

However, the advent of solid-state batteries resets the competitive landscape to a global starting line by 2027.

An Unfolding Power Struggle

Japan’s reentry into the competitive fray, armed with solid-state battery innovation and global scale, marks a shift from reactive to proactive strategies.

Toyota and Honda have already achieved parity in cost between hybrid and gasoline vehicles, underscoring their potential to redefine profitability in the solid-state battery era.

Chinese automakers, despite remarkable achievements, face an uphill battle to maintain their advantage. Solid-state battery advancements leave no room for complacency; the stakes are existential.

For the global auto industry, the next chapter of competition is about speed, scale, and strategic foresight. Only time will reveal whether Japan’s gambit will rewrite the rules of the NEV market or fall short of its ambitions.