China’s EV Rise and the Strategic Challenge for Japan’s Automotive Industry
China’s rapid expansion in electric vehicle production is reshaping global automotive competition for both European and Japanese automakers. Japan —a pioneer in hybrid vehicles— is struggling to translate this leadership into battery electric vehicles (BEVs), as Chinese manufacturers rapidly scale production and exports. At the same time, China’s dominance in battery manufacturing and critical mineral processing exposes upstream vulnerabilities for Japan’s automotive industry. Together, these developments create a dual challenge: intensifying downstream competition in electric vehicle (EV) markets and continued dependence on Chinese-controlled supply chains.
Titre
Key takeaways
Chinese manufacturers are competing on scale, price, batteries, and vertically integrated supply chains across both advanced and emerging markets.
It left it with a limited presence in China’s new energy vehicles market and exposed it to rising pressure in export markets.
China’s dominance in battery materials, critical raw materials (CRM) processing, and EV battery manufacturing gives it strategic leverage over the global automotive transition, increasing vulnerabilities for foreign automakers.
Its experience shows the vulnerability of CRM dependence, but also the value of resilience strategies in recycling, substitution, stockpiling, and supply-chain diversification.
To preserve its automotive industrial base, Europe must combine trade defense and industrial support with deeper partnerships with trusted partners such as Japan and South Korea to diversify supply chains and accelerate innovation.
Japan’s experience is particularly relevant for Europe. Like the European Union (EU), Japan hosts a globally competitive but mature automotive industry built around internal combustion technologies and complex international supply chains. Both are navigating the transition to electrification while facing growing competition from rapidly scaling Chinese EV manufacturers and similar exposure to supply-chain risks in batteries and critical minerals. Japan’s response therefore offers useful insights for European policymakers and industry leaders confronting comparable challenges.
This memo examines how Japan’s automotive sector is responding to these shifts. It first outlines the expansion of China’s EV industry and its implications for global competition. It then analyses the competitive pressure faced by Japanese automakers in EV markets and the upstream vulnerabilities linked to battery materials and critical mineral supply chains. The final section assesses the strategies adopted by Japanese firms and policymakers to adapt to this changing landscape.
Discover all our analysis and news on Asia and the Indo-Pacific.
Available in:
Themes and regions
ISBN / ISSN
Share
Download the full analysis
This page contains only a summary of our work. If you would like to have access to all the information from our research on the subject, you can download the full version in PDF format.
China’s EV Rise and the Strategic Challenge for Japan’s Automotive Industry
Author(s)
Related centers and programs
Discover our other research centers and programs
Center for Asian Studies
Asia is a nerve center for multiple global economic, political and security challenges. The Center for Asian Studies provides documented expertise and a platform for discussion on Asian issues to accompany decision makers and explain and contextualize developments in the region for the sake of a larger public dialogue.
The Center's research is organized along two major axes: relations between Asia's major powers and the rest of the world; and internal economic and social dynamics of Asian countries. The Center's research focuses primarily on China, Japan, India, Taiwan and the Indo-Pacific, but also covers Southeast Asia, the Korean peninsula and the Pacific Islands.
The Centre for Asian Studies maintains close institutional links with counterpart research institutes in Europe and Asia, and its researchers regularly carry out fieldwork in the region.
The Center organizes closed-door roundtables, expert-level seminars and a number of public events, including an Annual Conference, that welcome experts from Asia, Europe and the United States. The work of Center’s researchers, as well as that of their partners, is regularly published in the Center’s electronic journal Asie.Visions.
Find out more
Discover all our analyses
Crisis in the Strait of Hormuz. A Stress Test for Taiwan with Global Implications
The large-scale military operation carried out by the United States (US) and Israel against Iran triggered an Iranian retaliation that resulted in the partial destruction of natural gas liquefaction infrastructure and severe disruption of maritime traffic in the Strait of Hormuz. The economies of East Asia—South Korea, Japan, and Taiwan in particular—are highly exposed to this crisis due to their reliance on liquefied natural gas (LNG) imports for electricity generation.
Emmanuel Macron in Japan and South Korea: A Historic Opportunity for Euro-Asian Rapprochement
President Emmanuel Macron is touring Japan and South Korea at a time when the interests of these three countries have never been more aligned, and more broadly between Europe and East Asian democracies.
Afghanistan-Pakistan: The Overlooked War at the Margins of the Middle East Conflict
Pakistan has historically maintained the closest ties to the Taliban movement and initially viewed its return to power in Afghanistan in the summer of 2021 with considerable optimism. The bilateral relationship has since deteriorated, and the two neighbors have been caught in a cycle of escalation since last fall. In October 2025, Pakistan launched its first airstrikes on Kabul. For three weeks in February–March 2026, Afghanistan intensified ground assaults on the Pakistani side of the border as well as drone attacks on Islamabad and Rawalpindi. Pakistan, for its part, has intensified airstrikes on Afghan border areas, as well as on Kabul and Kandahar. Given the dynamics at play at the bilateral and regional levels, the prospects for a sustained return to stability appear limited.
European Union-India: Lasting Rapprochement or Partnership of Convenience?
The partnership between the European Union (EU) and India has long been limited to economic exchanges. Its political dimension has gradually developed, culminating in its elevation to the status of a “strategic partnership” in 2004. However, the failure of negotiations for a free-trade agreement in 2013 slowed this momentum. Since the early 2020s, in an uncertain geopolitical context, bilateral rapprochement has gained new momentum.