03 May 2023

Japan is in trouble

As some of my farflung correspondents will no doubt have noticed, I harp on the electric car revolution a lot. This post expands that a bit, to the looming facts about Japan, which sits poised to nudge the entire world economy into global recession (if the idiots in the Republican caucus of the House don't do it for them first). 

Contemplate this. Since 1990, Japan has lost its lead in several areas of global commerce. Sony invented the walkman and was a major player in consumer electronics in the 80s and 90s, even buying Columbia and CBS in the US as if they were just crumbs from the table. But they missed the "chip" revolution and failed to develop the iPhone or anything like it... and this is just symptomatic. The Japanese are barely in the consumer electronics or large appliance markets anymore, sectors largely dominated now by South Korea and the US, with some participation by Europe especially in larger appliances. China makes these things for its domestic market, as well as under contract to US and Korean manufacturers. In fact, other than scientific and technical instrumentation (important but not huge), and autos and other transportation technology such as shipbuilding, Japan is no longer at the forefront of any global technology. 

And now, the handwriting is on the wall. They have completely missed the boat on the EV revolution. They were pioneers, developing the hybrid drive and some early electrics (e.g., the Nissan Leaf), but they aren't even in the top 25 of any electric vehicle sales anywhere, and they have been resistant. Mitsubishi, Mazda, Subaru, Suzuki, and Honda have no potentially viable mass market electric vehicle even in preproduction, much less production. Toyota and Nissan are way behind too, with no credible plans to mass produce EVs at a profit anytime soon. Toyota, Nissan and Honda, the Japan big 3, all have global sales (of all cars, not just EVs) down 20 to 40% year over year due to their failure to produce cars that people want to buy. In the US a significant part of this sales loss has gone to Tesla, which is also the #1 seller of EVs in China. But the #2 to 20 or so brands are all Chinese, and the Chinese are poised to start selling their well engineered and popular cars (dominated by BYD) everywhere (except North America, interestingly). And EVs by Tesla and the Chinese are all going down in price, to levels that only Ford, GM, and possibly one or two European makers (not including BMW) have a prayer of matching. 

So what is the takeaway? Autos are 65-70% of Japan's manufacturing exports. And they are losing their market share at an alarming rate, with no end in sight. Japan has a national debt, that, proportionally, is far worse than America's. There is every reason to believe that Japan is headed for a massive economic downturn that may last for decades, and could drag the whole world economy down. 

Cheers, enjoy the springtime everyone. 


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