Lawmakers and government officials from Japan’s ruling coalition are preparing a draft amendment to the country’s tax law that would introduce a new levy on electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs), according to a report by Nikkei.
The proposed tax would apply to non-commercial EVs and PHEVs starting in May 2028, with proceeds earmarked for road maintenance. The draft has not yet been finalized and must still be debated and approved by Japan’s parliament before it can take effect, Nikkei said.
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The proposal comes as Japan’s EV market continues to lag behind those of China, Europe and the United States, despite gradual changes in recent years.
According to data from JATO Dynamics, battery-electric vehicles accounted for less than 2% of new passenger car sales in Japan in 2024, with hybrids—led by Toyota—continuing to dominate the market.
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However, the range of EV models available to Japanese consumers has expanded significantly. JATO notes that the number of battery-electric models on sale in Japan has grown from around 10 in 2019 to more than 60 by 2025, driven largely by imports from European and Chinese manufacturers rather than domestic brands.
