Japan’s auto industry is bracing for an explosion in demand for fuel-efficient cars amid a slowdown in China’s manufacturing and a new generation of diesel cars.
But the government is also eyeing a more cautious approach to market growth, with the government set to review a plan to create new auto plants to meet growing demand, according to people familiar with the matter.
The companies have been looking for ways to keep their costs competitive with those of their Chinese rivals, even as they seek to expand into other markets, according the people, who asked not to be identified discussing the internal deliberations.
While China has been trying to reduce its emissions by 20 percent from 2020 to 2040, it has been unable to keep up with demand for vehicles.
That has led auto companies to seek ways to improve fuel efficiency and cut costs, such as by creating a small-scale factory that produces only a few cars a year.
Those efforts have been met with resistance from government officials and consumer groups who have said the government has not done enough to improve the quality of the cars.
In October, the government unveiled plans to create a new auto plant in northern Japan to make fuel-saving vehicles.
The government said it had signed a memorandum of understanding with Mitsubishi Motors Co. to invest $3 billion in the new plant.
The agreement would be worth $1 billion over the next five years, and Mitsubis plans to use the investment to boost production of fuel-sipping cars.
The Japanese government has also announced plans to expand the number of new cars sold in Japan each year.
The plan to build a new factory will be part of efforts to boost the countrys production of new vehicles by 2040.
Mitsubishis plans are in line with an industrywide shift toward electric vehicles, with automakers starting to sell a range of electric vehicles.
This week, Toyota Motor Corp. announced it plans to build four electric vehicles in Japan, while Hyundai Motor Co. announced plans for 10 electric vehicles to go into production by 2021.
The moves by Japanese automakers have created uncertainty in markets including China, where new vehicles have largely been built on the backs of Chinese workers.
The new plants would be the first of their kind in Japan.
Toyota said in a statement it has hired several Japanese experts to help develop the plan.
The company also plans to introduce electric and hybrid cars in Japan over the course of the next 10 years, according in the statement.
The Mitsubisha factory in Tokyo will be the largest of its kind in the world, said Akira Yamamoto, a professor at the University of Tokyo.
It will be a major contributor to the economy and contribute to the country’s overall competitiveness, he said.
“They will have a huge impact on the economy, and it will also have a major impact on how Japan is perceived,” Yamamoto said.
Mitsui Corp. plans to make an electric car, according a company spokeswoman.
It’s also in the process of developing a hydrogen fuel cell car, which would go into mass production by 2020.
The plants would also be the latest of their size to be built in China.
In March, China’s National Development and Reform Commission unveiled plans for a plant in the eastern city of Tianjin, to make hydrogen fuel cells.
The project, known as the China Hydrogen Fuel Cell Plant, will use technology developed by Toyota.
In the United States, Honda Corp. and Nissan Motor Co., also Japanese automakers, have announced plans in the past for plants.
The Nissan plant in Tennessee will produce a plug-in hybrid vehicle.
It is expected to start production later this year, while the Toyota plant in Japan is due to start producing a hydrogen vehicle by the end of 2020.
Toyota’s efforts in Japan may help the Japanese automakers achieve their goals.
The investment would allow Mitsubischis to diversify into a variety of markets, including the United Kingdom, Europe and other countries, said Masanobu Oku, a senior vice president at Mitsubisan Securities Inc. in Tokyo.
But it also could help Japanese automakers meet tougher targets for fuel efficiency in the 2020s.
For instance, the company plans to reduce fuel consumption in its fuel-cell vehicles by more than 10 percent compared to 2020.
Mitsushis plan to produce about 3,000 fuel-electric cars annually by 2020, and by 2025, it plans on producing 5,000 vehicles annually.
Mitsubs plans to produce roughly 2,000 electric cars annually, and its goal is to reach 50,000 in 2025, according Mitsubijin Securities.
Mitsuzushi Mitsubiska Corp. said its fuel cell plant in Wuhan, China, will start producing fuel-diesel vehicles in 2020.
It expects to produce 2,600 fuel-engine vehicles annually by 2021 and 1,600 by 2025.
Toyota, which plans to develop a hydrogen engine in its Prius hybrid car, is in talks to build more than 400 hydrogen fuel-fueled vehicles, according Tokyo Electric