The EV Paradox in Japan: Factors Hindering the Adoption of Electric Vehicles

This paper examines the adoption of electric vehicles (EVs) as one of the key determinants of oil demand, and provides a perspective on how the oil distribution system should respond during the transition period. The “EV paradox” is defined as the phenomenon by which Japanese automakers, despite their environmental advantages, have failed to develop a domestic EV market. The structural factors behind the delayed diffusion of EVs are identified and the factors analyzed that either hinder or promote EV adoption, particularly the following five aspects: (1) environmental awareness, (2) niche formation, (3) hybrid vehicle (HV) system, (4) policy signals, and (5) residential environments and charging infrastructure. The paper concludes that the EV paradox in Japan originates in a capability trap and socio-institutional rigidity. Consequently, the transition to EVs in Japan is likely to proceed not simply as a substitution for internal combustion engine (ICE) vehicles, but rather through a gradual process in which new markets are added to existing demand through accumulated experience and learning, which implies a longer transition period. This delay may currently have the effect of maintaining the existing distribution system structure, but, assuming an eventual shift toward substitution, transformation into a more sustainable distribution system to satisfy consumer demand will be necessary in the future.