Hybrid vs EV: What Japan’s export numbers tell us about the real global demand

Written by: Kim Pedersen 2025/12/29

Japan’s HS8703 export powerhouse:

Japan’s automotive exports, especially those classified under HS8703 (vehicles for transporting persons), remain one of the country's most significant contributors to international trade. But how important is HS8703 really?

According to Japan Trade Statistics, the total value of HS8703 exports in 2024 was approximately ¥16.2 trillion. Compared to total Japanese exports of around ¥100 trillion, this places HS8703 at roughly 16 percent of Japan’s entire export value. While not an outright majority, it is among the top-tier export sectors, alongside machinery, electronics, and semiconductors.

More importantly, it is a strategic sector, labor intensive, globally competitive, and vital to Japan's industrial identity. But the past decade has not been smooth. Several global disruptors have influenced both the direction and volume of automotive exports. Let’s take a closer look.

A decade of disruption: Four key forces reshaping export dynamics

1. The COVID-19 pandemic (2020–2022)

The most visible disruption came with the global COVID-19 pandemic. In 2020, Japanese auto exports under HS8703 saw a sharp plunge in volume, as reflected in the official charts. Lockdowns halted production lines, demand collapsed in major markets, and shipping logistics were severely constrained.

Recovery began in late 2021, with 2023 marking a clear rebound across nearly all HS8703 subcategories. The return to pre-pandemic export levels demonstrated the resilience of Japanese manufacturers, who diversified supply chains and streamlined logistics.

2. The Ukraine conflict (Starting 2022)

The outbreak of war in Ukraine had limited direct impact on vehicle exports to that region but created secondary effects across global markets. Rising energy prices, raw material shortages, and currency volatility added pressure to export margins.

The graph here, only shows HS8703 3x xxx, which is ICE type, and does not include for instance EVs. The financial crisis in 2008, annexation of Crimea in 2014, pandemic in 2000, and the war with Ukraine in 2022, clearly have had an impact.

That said, Russian import volumes from Japan decreased noticeably after 2022. Meanwhile, other markets such as Southeast Asia, the Middle East, and Oceania absorbed part of the redirected supply. Japan responded by reallocating production and stabilizing shipments to more politically reliable destinations.

3. Climate policy shifts

The third disruptor was not a single event, but an evolving narrative: global concern over climate change and associated carbon dioxide emissions. Policies encouraging or mandating the adoption of hybrid and electric vehicles reshaped automotive strategies worldwide.

Japan adapted in a practical and non-ideological way. Rather than committing exclusively to battery-electric vehicles (EVs), Japanese automakers led with hybrid electric vehicles (HEVs), which combine internal combustion with electric propulsion.

This approach aligned well with consumer preferences and infrastructure realities in many countries. For example, HEVs represented more than 40 percent of vehicle exports by unit volume in 2025, according to shipment data under HS codes 870360xxx, 870370xxx, and 870340xxx.

Japan’s strategy avoided over-investing in battery platforms before the market was ready, focusing instead on fuel efficiency, technological credibility, and moderate electrification.

4. US tariffs and trade policy

A fourth shift came from trade friction, particularly tariffs on imported vehicles in the United States. These tariffs influenced where Japanese manufacturers built their vehicles. In response, production was localized, especially for standard ICE models under codes like 870330xxx.

This explains why exports of traditional vehicles to the US appear lower than one might expect, they are produced within North America instead. The US remains a major destination for hybrid exports, however, as these models are more complex and less widely manufactured outside Japan.

Understanding HS8703: More than just hybrids and EVs

The HS8703 category includes:

• 870310–870330: Internal combustion vehicles

• 870340, 870360, 870370: Hybrid variants (diesel, spark ignition, plug-in)

• 870380: Pure electric vehicles

• 870390: Other passenger vehicles, not elsewhere classified

Each subcategory shows distinct trends.

• 870380xxx (EVs) surged between 2021 and 2023, likely benefiting from EU and US climate incentives. However, the growth leveled out in 2024–2025, possibly due to supply constraints or regulatory shifts.

• 870370xxx (plug-in hybrids) and 870360xxx (standard hybrids) have grown steadily since 2017. These now account for a significant portion of exports, particularly to Europe, Australia, and Southeast Asia.

• 870330xxx (traditional spark ignition) still sees strong exports to developing markets, where EV and hybrid infrastructure is lacking.

• Notably, 870330 exports to the United States are low, supporting the view that domestic production in the US replaces direct imports.

Global buyers: Who buys what?

The latest visuals from japantradestatistics.com show that:

• The United States remains the top destination for hybrid vehicles

• Australia, the UK, and Saudi Arabia are consistently large importers of both hybrids and traditional vehicles

• EVs show high growth in the EU and parts of Asia, but taper off after 2023

• China imports from Japan but is also a competing exporter

A pragmatic future for Japan’s automotive exports

Japan’s export strategy, while influenced by global events, remains measured and focused.

The data suggests:

• There is no clear replacement for hybrids in the short term

• Japan’s multi-path technology strategy is paying off

• EV adoption is market and policy dependent, and may slow without strong political support

• Global consumers continue to value Japanese reliability, fuel economy, and build quality

While some voices still advocate for rapid transitions based on CO2 narratives, others, like Bill Gates, have begun questioning the urgency and framing. Regardless of ideological views, Japan’s automotive export success remains rooted in flexibility, strong manufacturing, and an ability to read the market.

Conclusion: HS8703 is not just a code, it is a lens

By examining the data on HS8703 exports, we see more than just vehicle counts, we see how global events, policy shifts, and consumer realities shape economic outcomes.

To explore the real data yourself, visit JapanTradeStatistics.com, where export figures can be filtered by HS code, country, and year, providing the clarity that media narratives often overlook.

Go deeper than headlines. Work with the data yourself

All observations in this article are based on Japan’s official trade statistics (Ministry of Finance), explored and visualized through JapanTradeStatistics.com.

The platform (japantradestatistics.com) allows you to:

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👉 Explore the data yourself at: https://www.japantradestatistics.com/export/hs8703

For analyzing yourself, you need to become member (500 JPY + VAT / month) and purchase a HS4 dataset (500 JPY +VAT / month). You can at any time cancel your membership and HS4 dataset easily.

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