Japan Raises EV Purchase Subsidy Ceiling to 1.3 Million Yen in Sweeping Policy Update, Chinese Brand

TOKYO — Japan's Next Generation Automobile Promotion Center (Nexus), operating under the Ministry of Economy, Trade and Industry (METI), released a comprehensive revision to its Clean Energy Vehicle Purchase Subsidy (CEV subsidy) scheme in March 2026, with the subsidy ceiling raised from 900,000 yen to 1.3 million yen per vehicle. The updated framework introduces a 200-point scoring system divided into vehicle assessment (100 points) and manufacturer assessment (100 points). The vehicle component covers range, energy efficiency and safety — relatively objective criteria. The manufacturer component covers charging infrastructure deployment, after-sales service networks and local supply chain contribution — criteria that industry analysts say strongly favor established domestic brands. Toyota bZ4X, Honda Honda-e, Lexus UX300e and RZ300e all qualified for the full 1.3 million yen subsidy. Tesla Model Y and Model 3 each received 1.27 million yen. BYD's models, by contrast, saw no increase from their existing subsidy levels of 350,000 to 450,000 yen — roughly a third of what a domestic brand receives — despite BYD meeting the same vehicle-assessment benchmarks as competitors. The subsidy revision follows months of deliberation over how to balance consumer access to affordable EVs against the government's stated goals of supporting domestic industry and reducing reliance on Chinese-manufactured vehicles. Industry observers note that the manufacturer-assessment component effectively functions as a non-tariff barrier, given the difficulty of foreign brands — particularly Chinese manufacturers without established Japanese dealer networks — to score points on local supply chain and service criteria. Japan's move mirrors similar policy directions in South Korea, where a new 100-point eligibility framework for government EV subsidies has also resulted in the exclusion of several Chinese brands from subsidy eligibility from July 1, 2026 onward.