Comment by mullingitover
5 days ago
I'm convinced that the Japanese government is terrified of EVs because all the small and medium-sized businesses which support the Japanese auto industry will be absolutely gutted when vehicles contain drastically fewer parts.
That, and Japan is deeply screwed if they go all-in on EVs and then China decides they shouldn't be allowed access to any more rare earths.
> China decides they shouldn't be allowed access to any more rare earths
This is a common misunderstanding. There are plenty of alternative locations to mine rare earth minerals, particularly Australia. China cornered the market because it's a high pollution low margin business. If geopolitical concerns cut off access to Chinese sources, alternatives will be developed.
Mining isn't the only bottleneck with rare earths. There also the processing, which is an industry China has monopolized through sustained investments over decades. They have also improved processing efficiency through investments in technology. It's going to take a while for anyone else to catch up.
> There also the processing, which is an industry China has monopolized through sustained investments over decades.
I don't think this is the right way to characterize it. China invested when other countries didn't, but they didn't monopolize the market, they have no moat beyond expertise and some tech advancement that could be replicated easily enough. The only moat they have is related perseverance and other countries simply not wanting to put the work in.
11 replies →
Processing is the thing china does, you don't really mine rare earths, they are in many areas. Sure there are substrates it's easier to extract from, but the massive pollution of the processing that china was willing to accept when others were not that allowed them to corner the market. It can be done more cleanly, the US has some processing for strategic reasons (not enough though), but doing it clean is _very_ expensive. Lets hope the people modifying plants to concentrate elements make work.
> an industry China has monopolized through sustained investments over decades.
Well, well, well, if it isn't the consequences of everyone's own inaction...
As I understand it, some of these processes also require a sufficiently large industrial base to be even remotely economical due to a reliance on industrial 'byproduct' (for want of a better word). Because of this, some of these processes are not something that can be quickly stood up in isolation over a few years. It would take concerted large scale planning over a long time period - something the Chinese system of government is almost uniquely capable of.
Japan is also particularly well positioned because China had used rare earths against them first in 2014. Since then they've created basically a strategic rare earths reserve and done research on how to build some components without them. It's not an absolute solution but between this and future development in friendlier nations, I don't think the rare earth risk is as acute for Japanese automakers.
I do think the original point about lower complexity vehicles being a threat to the suppliers has some merits though. Germany faces a very similar dilemma and made similar decisions.
There are also non rare earth magnets being explored. Niron - Iron nitride - magnets and ultrasonic compaction and other tech that wasn't feasible a while back are now becoming very practical. Japan could probably get to a dominant place with a solid research program, it'd give them a huge advantage for EVs and other motors.
Dont forget about good old externally excited motors like what Renault uses, no rare earths needed.
1 reply →
Or they're unprofitable and highly competitive.
Ford: It recorded a loss of $1.2 billion in EBIT in the third quarter on its EVs, bringing its losses on the segment for the first three quarters of 2024 to $3.7 billion
Honda: Honda to Write Off $15.7 Billion as EV Winter Arrives.
https://www.reuters.com/business/autos-transportation/ford-r...
https://www.barrons.com/articles/gm-stock-general-motors-inv...
https://www.barrons.com/articles/honda-to-write-off-15-7-bil...
That projection won't last in a world where Brent Oil @ $100. That was only true while the petrodollars kept flowing.
It's also not representative for the whole industry. BMW is profitable with their electric cars, and 18% of their sales are fully electric.
> I'm convinced that the Japanese government is terrified of EVs because all the small and medium-sized businesses which support the Japanese auto industry will be absolutely gutted when vehicles contain drastically fewer parts.
For what it's worth, this theory is blown up by hydrogen based vehicles, which Japan has gone heavily in on. Yes, slightly more parts than an EV, but not a ton. And the drivetrain is electric.
It really shows the bias in Honda’s management here. They’ve also spent years trying to develop and promote their hydrogen fuel cell cars and it’s just as much of a failure as their EV division yet they aren’t axing that golden child.
That's a fundamental misunderstanding of why they're going in on hydrogen so hard - it's something they can generate domestically and without geopolitical implications.
If there is a war with china or in the middle east, hydrogen vehicles are somewhat immune to oil or rare earth spikes.
They will likely never roll out hydrogen power in any large capacity but the capability will be there if they need it
3 replies →
Is there a place somewhere in the world where Hydrogen powered passenger vehicles are a success? I know that the one Hydrogen filling station here in Australia's Capital City has shut down after opening with great fanfare a few years ago. And the approximately 20 or so Hydrogen cars it supplied are no longer being used.
I just looked it up for Germany[0] and there were a whopping 3 (0.0%) new hydrogen fuel cell cars registered in Februrary 2026. Even LPG cars were more with 397 registered.
For comparison 21.9% were BEVs, 11.5% Plugin hybrids, ~51% pure petrol or non plug-in hybrid, and 14.8% Diesel.
[0] https://www.kba.de/DE/Presse/Pressemitteilungen/Fahrzeugzula...
1 reply →
They have not gone heavely in on hydrogen based vehicles. They have talked about it a lot, and given some subsidies, but nothing so major as to make any impact at all.
Also, they invested in in hydrogen internal combustion engines just as much.
But isn't Japan deeply screwed if they can't drastically cut their dependence on oil imports?
Also going to suffer a demographic crunch, having fewer jobs in more advanced technology would suit well with a shrunk labour force.
Not to mention how adverse they are to foreign workforce
Japan is the only other country besides China and Korea that produces magnets of high quality (higher in fact than the Chinese), they just don't do the volume. But there is absolutely no doubt that they could scale up if they wanted to.
They're just more expensive, but not even that much.
India is looking to produce 6000 tonnes of NdFeB magnets per year with the first batch coming out in mid 2026. This is great news because India has large rare earth reserves and are producing using the full supply chain of ore to oxide to magnets. 6000 tonnes is like 3% of the global supply but that’s not bad for year one.
That's super good news, do you have any info on the name of the manufacturer?
2 replies →
They manufacture the magnets, but they don't produce the rare earths themselves. They're still getting something like 60-70% of their supply from China.
That's 60% to 70% down from 90%+ and dropping steadily every year.
https://www.nytimes.com/2025/12/08/business/japan-rare-earth...
1 reply →
Toyota just had three large EV announcements and they are putting large incentives on some of them. Feels like they're serious about it and with so many others exiting the EV market lately they may have timed it well.
> all the small and medium-sized businesses which support the Japanese auto industry will be absolutely gutted when vehicles contain drastically fewer parts.
EVs have lots of the same parts as an ICEV - the differences are engine and power systems, fuel tank, transmission... Most of the car is still there. There is a lot of churn - lead-acid is out, fuel injection, sensors are different and sense different things, and so on, but it's still a car.
China already did, in 2010, against Japan. Japan has been preparing alternatives for a decade and a half now.
https://www.economist.com/asia/2025/12/04/lessons-from-japan...
I've read that the Japanese electrical grid would be hard to upgrade to charge lots of electric vehicles, and that somewhat explains their enthusiasm for hydrogen.
I live in Japan and IMHO the problem is that it is an extremely conservative and risk averse country, "if it ain't broke don't fix it" taken to the extreme. They had a period of innovation after WW2 out of necessity, but after the bubble crash of 1990 they reverted back to their old selves.
Japan is just being the usual USA vassal. Since now China absolutely dominates EV and batteries, they rather align themselves with the oil-thirsty war monger.