BMI View : The recent decision by private companies to switch to a fee-based system for charging facilities will deter Japanese consumers from purchasing EVs in the short-term. However, as consumers realise the convenience factor outweighs the minor increase in cost, we believe this sustainable business model could become the industry norm in the long term. BMI sees the potential of this model to be adopted by emerging EV markets to increase their charging facilities, which would provide a boost to their EV sales and production.
Financial pressures are causing certain Japanese charging network member companies to switch to a paid service for their quick charging facilities that were initially free. There is some concern this would hinder the spread of electric vehicles (EVs) as consumers might be put off by the extra cost. However, consumers can still access free chargers set-up by local governments and other organisations at over 1,000 locations in Japan. Japan Charge Network, established by Nissan Motor and three other firms, began to charge fees in October at about 30 quick charging stations set-up at convenience stores and elsewhere in Kanagawa Prefecture, Tokyo.
|Name||Japan Charge Network||EV Service Station Network||Charging Network Development Organisation|
|Source: BMI, The Daily Yomiuri|
|Member Companies||Nissan, Sumitomo Corp, NEC, Showa Shell Sekiyu||JX Nippon Oil & Energy, Showa Shell Sekiyu, Idemitsu Kosan, Cosmo Oil||Nine companies, including Toyota Motor, Honda Motor, Mitsubishi Motors & Chubu Electric Power|
|Start Date Of Fee System||October 2012||January 2013||November 2012|
|Number Of Charging Stations||About 30||28||About 110|
|Monthly Fee||¥500 (Basic Plan)||Unlimited charging for monthly fee of ¥3000. For non-members ¥1000 per charge||¥1050|
|One-Time Fee||Between ¥420 & ¥600 (Basic Plan)||Nil|
BMI believes this move will negatively affect EV sales in Japan in the short-term. Many of the current paying users of Japan Charge Network are owners with two cars. Their EV is their second car, which is mainly for private use. Given that it is not an absolute necessity, we could see future owners in the city putting off their EV purchases due to the extra charges incurred through charging facilities. Furthermore, owners of EVs have traditionally expected companies to provide these facilities for free, not least due to EVs costing more than traditional cars. For example, owners of Tesla's Model S can charge their cars for free in any of its six installed superchargers in California. Charging customers for using quick chargers might deter them from purchasing EVs as it is not an industry practice to do so.
In the long term though, we believe this sustainable practice could become the industry norm and potentially be used as a model for other countries, which suffer from a dearth of charging facilities. To be sure, the marginal cost of using quick charging points is small vis-a-vis the overall price of the car. As consumers see the benefit of paying a little more in return for the convenience of charging their cars on the go, we believe they would become more accepting of this practice.
Furthermore, we have long stated that one of the key reasons for the low production and sales of EVs in China is due to a lack of public charging facilities. The government is not able to cope on their own with the construction of public chargers all over the country. If third party manufacturers as well as owners of the property, where these charging points are placed, can come to a revenue sharing agreement, there would be greater interest from these players to install more chargers. With charging facilities then becoming ubiquitous, we would see consumers more willing to purchase an EV.
We also believe the different membership plans provide an opportunity for automakers to compete on their offerings. Should the number of charging facilities in Japan increase with the spreading of this practice to other parts of the country, automakers will be able to tailor different price plans for their various market segments. This might also have the effect of influencing consumers on their EV purchasing decision by giving them the discretion to choose brands, which have the more conveniently placed quick charging points.