The electric vehicle threat to Japan’s car industry

Japan’s carmakers face an existential threat from the emergence of cheap EV exports from China. Even in a benign scenario where carmakers eventually jump on the EV bandwagon, we suspect that they would have to rely on battery technology from China and would continue to shift production overseas. In a more downbeat scenario where Japanese carmakers get overwhelmed by Chinese competition, domestic car output probably wouldn’t collapse altogether but could still fall by two-thirds.