TOKYO -- Consumer electronics retailer Yamada Denki will partner with a startup to sell entry-level compact electric vehicles by 2020, joining the growing ranks of nonautomotive entrants into the sector.
Barriers to entry for building electric vehicles are lower than for gasoline autos. About 40% of the parts in gas-powered vehicles are unnecessary in electrics, according to the Ministry of Economy, Trade and Industry. Dyson, a British company known for vacuum cleaners, plans to sell electric vehicles by 2020 as well.
Yamada agreed Monday to invest in electric-vehicle startup FOMM, based just outside Tokyo in Kanagawa Prefecture. The retailer is expected to spend slightly more than 1 billion yen ($8.83 million) for a roughly 10% stake. FOMM was founded in 2013 by a team including engineers who had worked on developing electric vehicles at a Toyota Motor group company. It is working toward an initial plan of mass-producing compact electric cars in Thailand.
FOMM appears to be negotiating toward a deal to receive parts and investment from Chinese businesses including a member of the Beijing Automobile Works group.
The startup is planning and developing small, electric four-seaters tuned to the needs of the Japanese market. It will entrust assembly to electronics maker Funai Electric. The cars are geared to general consumers, but demand is also expected from local governments and others. Sales are targeted at tens of thousands of vehicles a year.
Yamada plans to sell the cars for 1 million yen or cheaper at stores throughout Japan as well as online, partnering with other companies for such services as maintenance. By comparison, versions of Mitsubishi Motors' minicar-sized i-MiEV electric vehicle launched in December 2016 go for prices in the 2 million yen range.
Yamada is also considering other ways to lower prices, such as selling vehicles as a set with homes offered by a group company and billing based on distance traveled.
Global electric-vehicle production is seen increasing from about 690,000 this year to 4.58 million units in 2025, according to British research firm IHS Markit. The market will likely heat up further if companies beyond traditional automakers continue to join in.