By CHINAMI TAJIKA/ Staff Writer
December 18, 2025 at 16:38 JST
U.S. Commerce Secretary Howard Lutnick, left, meets with his Japanese counterpart, Ryosei Akazawa, during bilateral trade talks in Washington on Sept. 4. (Ken Sakakibara)
The economy ministry will revise its eco-friendly car subsidy program next year due to pressure from the recently concluded tariff negotiations with the United States.
Subsidies for electric vehicles (EVs) will rise from the current cap of 900,000 yen ($5,700) to 1.3 million yen beginning in January, favoring a sector where the United States leads Japan, according to sources.
Plug-in hybrid vehicles will also see their maximum subsidy rise from 600,000 yen to 850,000 yen.
In contrast, fuel cell vehicles will face a sharp reduction in support, dropping from 2.55 million yen to 1.5 million yen from April. Japanese automakers currently hold a competitive edge concerning these hydrogen-powered models.
Subsidies for low-powered “kei” EVs will remain unchanged at 580,000 yen.
In a March report, the Office of the United States Trade Representative (USTR) argued that Japan’s subsidy structure disadvantaged American EV makers while disproportionately benefiting Japanese firms.
The USTR described the policy as a non-tariff barrier that hindered U.S. car sales in Japan.
Tokyo and Washington later issued a joint statement in September on tariff negotiations where both pledged that subsidies would be extended to U.S.-made vehicles.
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