Tokyo Has a Different Plan
The expiration of the $7,500 federal EV tax credit in September 2025 removed a major discount for eligible Tesla Model Y buyers. At around $40,000, the electric crossover may be priced in line with rivals like the Ford Mustang Mach-E, but it is not exactly a cheap entry into EV ownership. California does offer a $3,500 rebate, but only for first-time EV buyers.
With the current administration rolling back support for EVs and automakers putting more emphasis on hybrids, the U.S. EV market remains under pressure. That strikes a sharp contrast with Tokyo, where, according to Automotive News, eligible buyers can get a Model Y for under $23,000, or about ¥3.6 million. Combined national and local subsidies of up to around ¥2 million reduce the purchase cost, while a weaker yen makes the dollar equivalent especially low.
A Better Deal Across the Pacific
This means that the Japan-spec Model Y, sourced from Shanghai, China, can cost about $17,000 less after subsidies than its counterpart. The Japanese subsidies are meant to accelerate zero-emission vehicle adoption, similar to the now-expired U.S. EV tax credit. Tesla is highlighting them in Japanese ads as it looks to gain ground against established brands such as Toyota and Suzuki.
The Model Y is already gaining traction in Japan after becoming the country’s most-imported vehicle, including gasoline-powered models, in the first half of this year. The Japan News reported that the Toyota bZ4X – known simply as the bZ in the U.S. – was Japan’s best-selling EV in the first half of 2026, followed by the Nissan Leaf, which underwent a major overhaul for the 2026 model year.
The Model 3 is even more affordable at ¥3.3 million (about $21,000) after subsidies.
Tesla Still Shows Up
While Japan gets to enjoy the incentives, most American EV buyers now have far less help. The expiration of the EV tax credit triggered a huge demand surge in late 2025 as buyers rushed to purchase an EV before the deadline, followed by a drop in sales.
The U.S. EV market is showing signs of revival after more than 100,000 EVs were registered in June 2026 – the first month since the incentive ended to reach that mark – though registrations were still down 11% year over year. Tesla’s Model 3 and Model Y continue to lead the way, followed by the likes of Hyundai Ioniq 5, Toyota bZ, and Chevrolet Equinox EV.
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