Global 'EV Subsidy Cuts' Backlash: Tokyo's Bold 1.3 Million Yen Increase Explained

*This content was translated by AI.

Tokyo Metropolitan Government has decided to significantly increase subsidies for electric vehicle (EV) purchases. This move runs counter to the global trend among major countries to reduce or eliminate EV subsidies.

According to Japanese automotive media outlets, starting next month on the 1st, Tokyo will uniformly raise the subsidy cap for battery electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) by 300,000 yen each. Consequently, the maximum subsidy available to Tokyo residents purchasing a pure electric vehicle will increase from the previous 1 million yen to 1.3 million yen. The support for plug-in hybrid vehicles will also be expanded to a maximum of 1.15 million yen.

This decision contrasts sharply with the policy direction of major countries such as the United States, Germany, and China, which are recently reducing or halting EV subsidies and tax incentives. The U.S. has significantly cut federal EV tax credits and subsidies, prompting automakers to shift focus back to internal combustion engine and hybrid vehicles. Germany completely ended its subsidies last year, while China has terminated national subsidies and transitioned to a market competition model. Most developed nations are reducing subsidy support citing fiscal burdens and the need to ensure market self-sustainability.

The background behind Tokyo's decision to increase subsidies lies in the "EV avoidance" phenomenon in Japan. Japan is a powerhouse in hybrid vehicles, with the penetration rate of pure electric vehicles remaining in single digits. Compounding this is the stagnation in global demand for electric vehicles, raising concerns that the market could shrink.

Tokyo is pursuing a goal to convert 100% of new vehicle sales within the metropolitan area to non-gasoline vehicles by 2030. To achieve this, it is implementing strong support policies, including subsidy increases at the local government level.

This increased benefit applies to vehicles first registered after July 1, 2026. The target includes individuals and corporate businesses in Tokyo purchasing vehicles that meet national subsidy requirements. An industry source stated, "While the world is demanding EV self-reliance and cutting support, Japan is in a situation of adding more firewood to keep the embers alive."

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*This content was translated by AI.