Startups take on the big boys in electric vehicles

Dominated by the likes of Toyota, Nissan and Honda, Japan's auto industry would seem to have little room for competition.

But startups are making significant, albeit relatively minor, inroads by focusing on very basic electric compacts that the auto giants dare not invest in due to a lack of mass demand, and, therefore, no profit.

These small enterprises are, however, saddled by weak sales networks and, analysts say, no match for their counterparts in China, where the government provides support to promote sales of electric cars as part of its national policy.

This, then, is the background to a number of small companies in Japan that are striving to make their presence felt.

Toyama-based Mitsuoka Motor Co. said Sept. 7 it had begun full-scale sales of its two-seater Like-T3 electric tricycle model.

"I expect it to sell quickly," Susumu Mitsuoka, chairman of the company, said at an explanatory session in Osaka.

The EV can be fully recharged in six hours by plugging it in to an home electrical socket, enabling the vehicle to make a journey of up to 60 kilometers.

It can carry a maximum load of 100 kilograms, compared with 30 kg for Toyota Auto Body Co.'s Coms compact, single-seater electric car.

Mitsuoka marketed the Like-T3 on a trial basis in 2012. The electric vehicle has since been embraced by small-scale delivery service providers or as a rental car for short hops at tourist sites. Mitsuoka has also received orders from farmers as a convenient means to transport fruit from their orchards.

Starting in August, Mitsuoka began sales of the Like-T3 via 20 car retail shops and other stores across Japan. Prices start from 1.264 million yen ($12,400), excluding tax, if buyers take advantage of subsidies from the Ministry of Economy, Trade and Industry.

"We thought we would be left behind in the auto industry if we did not develop electric vehicles," said the Mitsuoka chairman.

As the Like-T3 is in the same category as the compact motorcycle with a side car, owners are exempted from mandatory regular car inspections and the submission of certificates to prove they have adequate parking space.

The Like-T3's motor unit is in the rear, which ensures driving stability even on sloping roads, according to company officials, who anticipate sales of 300 Like-T3s in 2017.

Their rationale is that "large automakers would hesitate to develop such a vehicle because there is not such high demand for that type of car."

According to the officials, Mitsuoka will continue to focus on developing electric cars and market a single-seater, tricycle electric vehicle in 2017. It also plans to introduce a compact, four-wheel electric model in 2019.

STARTUPS APLENTY, NUMEROUS CHALLENGES

Because electric cars do not require so many parts, they are simpler to assemble than gas-powered vehicles, which is another reason startups are keen to enter the business.

GLM Co., an entrepreneurial spinoff from Kyoto University, started mass production of its Tommykaira ZZ electric sports car at a dedicated assembly plant in Maizuru, Kyoto Prefecture, in October 2015. The vehicle can accommodate two people.

Although the car carries a hefty price tag, 8 million yen excluding tax, GLM said it received "more inquiries than the model's unit sales immediately after the announcement (of mass production), underscoring its popularity."

FOMM Corp. plans to release its Concept One vehicle in Thailand in the latter half of 2017. Concept One can accommodate up to four people and float in water, which would be a boon to a country that has experienced disastrous flooding.

ElecTrike Japan Co. is selling an electric tricycle, named after the company, that boasts computerized control of motors driving rear wheels to improve stability. The company is considering reducing the price of the model through mass production overseas.

rimOnO Corp. said it will release a specially designed two-seater car, rimOnO, as early as next summer for around 1 million yen. Waterproof canvas and urethane foam are used for the body. Company officials noted that body panels can easily be replaced, and thus change the appearance of the vehicle.

Toru Hatano, a principal analyst at IHS Automotive, pointed out: "The Japanese market is still not so brisk compared with China, whose government is working hard to spread the use of electric vehicles."

He noted that startup companies, unlike large firms, are unable to establish strong sales networks by themselves. Small, new companies have no choice but to rely on the Internet to sell their products. Thus, it takes time for them to recoup development costs.

As it happens, a startup in the Kinki region received a government subsidy and developed an electric car on its own, but later was forced to suspend the project.

The startup had intended to develop the electric car as a new business, but dropped the plan after it became clear that production costs could not be reduced and profits would remain elusive.

(This article was written by Tomoyuki Izawa and Satoshi Shinden.)

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