Japan to Phase Out Gasoline-Powered Cars, Bucking Toyota Chief

TOKYO—Japan said it planned to stop the sale of new gasoline-powered cars by the mid-2030s, bucking criticism by

Toyota Motor Corp.’s

chief that a hasty shift to electric vehicles could cripple the car industry.

The plan released Friday followed similar moves by the state of California and major European nations, but it has faced resistance from car executives in a country that still makes millions of cars annually running solely on gasoline engines.

Japan would still permit the sale of hybrid gas-electric cars after 2035 under the plan. Many models from Japan’s top car makers—Toyota,

Honda Motor Co.

and

Nissan Motor Co.

—come in both traditional and hybrid versions.

Earlier this month, Toyota President

Akio Toyoda

said that if Japan was too hasty in banning gasoline-powered cars and moving to electric vehicles, “the current business model of the car industry is going to collapse.” He was speaking on behalf of Japanese car makers in his role as head of a local industry association.

Mr. Toyoda said the electricity grid couldn’t handle extra summer demand and observed that most of Japan’s electricity is generated by burning fossil fuels.

Government officials said car makers needed to revise their business models. Prime Minister

Yoshihide Suga

pointed to a different portion of Mr. Toyoda’s comments in which the Toyota chief said he backed the government’s goal of making Japan carbon-neutral by 2050. Reducing carbon emissions “should be tackled as a strategy for growth, not as a limitation on growth,” Mr. Suga said.

The government plan calls for all new cars sold in Japan from the mid-2030s onward to be electrified. That includes electric vehicles, hybrid gas-electric models and cars whose electricity is generated by hydrogen fuel cells. The plan says the cost of batteries should be reduced so that electric vehicles cost about the same as gasoline-powered vehicles a decade from now.

A plan outline released by the Ministry of Economy, Trade and Industry expressed concern that Europe and China were jumping ahead of Japan. It observed that sales of EVs and plug-in hybrid vehicles more than tripled in the European Union in the July-September quarter to around 270,000 units, while the equivalent figure for Japan was only about 6,000.

Masayoshi Arai,

a ministry official, said “Japan is very far behind” on vehicle electrification.

Japanese auto executives bristle at such statements, saying more hybrid gas-electric vehicles are sold in Japan than in any other country. Some question whether fully electric vehicles such as those made by

Tesla Inc.

are more environmentally friendly than hybrids given the carbon dioxide emitted in producing EVs and their parts.

“It is absolutely not the case that Japan is behind,” said

Toshihiro Mibe,

a Honda executive who heads an industry council on environmental technology.

Write to Peter Landers at peter.landers@wsj.com and Chieko Tsuneoka at chieko.Tsuneoka@dowjones.com

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