“There are points where it’s conceivable if we compromise more” on the specifications, “but based on our current thinking, I feel it will be difficult to realise the ¥1 million range”, President Toshihiro Suzuki said. The new model is scheduled for release in fiscal 2023, which begins in April.

The Japanese automaker views a city-oriented commercial vehicle with a limited battery capacity as “an easy jumping-off point for an electric mini vehicle,” Suzuki said, based on an analysis finding that vehicles in big urban areas are driven only around 50km a day.

But “costs for raw materials are soaring”, he said, “and with mass production, we’ll be competing for materials, driving prices higher”.

Nissan Motor and Mitsubishi Motors released their jointly developed Sakura and eK X electric passenger minicars in June, at an attractive price point of around ¥1.8 million including subsidies. But both automakers announced price hikes of up to 6% on these kei models last month, citing higher materials and shipping costs.

Suzuki, coming to the market later, is starting in the commercial space. It will supply electric commercial mini vehicles to a project for improving logistics by Commercial Japan Partnership Technologies, a Toyota Motor-led joint venture in which Suzuki holds a stake. The project is set to begin in Tokyo and Fukushima prefecture this year.

At this stage, the Suzuki president thinks the market for electric minicars remains reliant on subsidies.

“They sell well in areas with generous subsidies like Tokyo and Kanagawa prefecture,” Suzuki said, but “sales plummet once those run out”.

The industry needs electric models that current minicar users “can drive easily without any sense of discomfort”, he said.

Suzuki also stressed the importance of the infrastructure needed to support these cars and called for a menu of subsidies for an organisation to handle the upfront investment in charging stations as well as future maintenance.

Spurring broad adoption of electric minicars, including in areas where drivers need to travel longer distances, “will require more than 1 million charging stations across Japan”, he said.