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2025.1.15

Business

Sumitomo Corporation × Nishitetsu's Challenge to Retrofit EV Buses: A Developer Shares Their Passion for the Project

The bus industry is steadily introducing EV buses, playing its part in the realization of carbon neutrality by 2050. Yet there are many challenges to overcome in the widespread adoption of EV buses, including manufacturing costs and charging infrastructure. To help solve these issues, the Sumitomo Corporation Group has teamed up with the Nishi-Nippon Railroad ("Nishitetsu") Group in Fukuoka to work on a "Retrofit* EV Bus" project that involves repurposing diesel buses that are over ten years old into EV buses. Today we spoke with Masaki Yamamoto, who leads the Commercial Vehicle Business Unit, about his passion for the project and how retrofit EV buses have the potential to open a new future for Japan’s bus industry.
*Retrofit refers to adding new technology or parts to existing machinery or equipment to improve functionality or change its purpose.

  • Commercial Vehicle Business Unit

    Masaki Yamamoto

    Masaki joined Sumitomo Corporation in 2002. After working in the chemical division in electronics and cosmetics, he moved to the automotive sector in 2017 and began working on EV and battery-related businesses. He has been involved in new business development in Fukuoka since 2020 and launched the retrofit EV project. In May 2024, he was seconded to Sumitomo Corporation Power & Mobility division as a project leader, working with regional teams both domestically and internationally to expand the business. Masaki also has experience working in Taiwan during his time in the chemicals division.

The Retrofit EV Bus Project Emerged During the COVID-19 Pandemic, Creating Low-Cost, Decarbonized and Circular Economy Solutions

In recent years, the "retrofit EV bus" has been attracting a lot of attention in the industry. Why did Sumitomo Corporation decide to launch it in Fukuoka?

The project started in 2020, with the establishment of the Kyushu Mobility Service Development Division, also known as Mobi-Q, a new business development unit within Sumitomo Corporation Kyushu.

Mobi-Q established the mission of "Creating what the market really needs, rather than only pursuing profits." The team was encouraged to think freely and flexibly – "do anything, think differently and create something new" – without being tied to conventional ideas. Fukuoka was an ideal place for new business development because of its dynamic, energetic local environment.

Before moving to Fukuoka, I was involved in the battery business, mainly with EV bus manufacturers. During that time, I became aware that the Nishitetsu Group, based in Fukuoka, owned around 2,600 buses, the largest fleet in Japan. At that point, social awareness of carbon neutrality was not as strong as it is now, but the bus industry was becoming increasingly conscious of the need to reduce CO2 emissions through electrification. This was when I thought I wanted to work with Nishitetsu on this project. The combination of my background and the social impact of the business led to the launch of the Retrofit EV Bus project.

Was it easy to negotiate with Nishitetsu?

Initially, it was tough. Nishitetsu had already tested one converted EV bus, but despite the high cost of around 100 million yen, it only ran for around fifty kilometers on a single charge. This poor performance made them hesitant about adopting EV buses.

While we explored other proposals, the COVID-19 pandemic hit transit operators hard, and Nishitetsu, like many others, began focusing on extending the lifespan of existing buses rather than making new investments. However, replacing parts in existing buses would cost approximately 10 million yen per unit. For this reason, we began discussing the possibility of converting buses to EVs at a similar cost.

The global push for decarbonization worked in our favor. With the Biden administration’s carbon-neutral policies and Japan setting its 2030 and 2050 environmental goals, there was an accelerated focus on environmental solutions. Additionally, the creation of the Prime Market and mandatory TFCD* disclosure requirements further encouraged companies to act on environmental issues.

As concerns grew over the CO2 emissions from their bus fleet (which accounted for half of Nishitetsu’s total emissions), we continued our resolve to propose new ideas. This led to positive discussions within Nishitetsu, where the idea of converting buses to EVs began to take hold internally. We immediately presented a concrete solution, and thanks to the trust we had established, were able to move forward. I felt that this was the moment when our efforts paid off. It reinforced my belief that opportunities come to those who refuse to give up in the face of challenges.

*Task Force on Climate-related Financial Disclosures

So, the global decarbonization trend paved the way for the EV shift, and the value of retrofitting was recognized during the pandemic?

Yes. A new EV bus costs around 50 million yen for a model made in China, and nearly 70 million yen for one made in Japan. Even with government subsidies, it still costs over 30 million yen per vehicle. However, by retrofitting, we can convert a diesel bus to an EV for about one-third of the price, making it a very cost-effective option.

Additionally, the retrofitting process doesn’t require changes to the driver’s cockpit, so there’s no need for drivers to learn new operations. This helps reduce stress and maintain safety.

Bus interior being converted to EV

A Miracle Collaboration Addressing the Challenges of Bus Operators, a Taiwanese Company’s Goals and Sumitomo Corporation’s Mission

For this project, Sumitomo Corporation is not only collaborating with Nishitetsu, but also with Nishitetsu Auto Body Tech and RAC, a leading Taiwanese EV bus manufacturer in which Sumitomo Corporation acquired a stake in 2019.

Nishitetsu Auto Body Tech handles the modification and repair of buses, and previously manufactured buses. Meanwhile, RAC has been developing and selling EV buses in Taiwan and is the only Taiwanese company to have received certification for government subsidies for EV conversion of transit buses. RAC is also involved in green business initiatives, such as reusing used batteries.

I had the opportunity to work in Taiwan for about five years, and I consider Taiwan my "second home." I didn't have any connection with RAC at the time, but after returning to Japan, I began working with them as a customer for batteries. Sumitomo Corporation invested in RAC to provide EV kits, while I proposed the EV bus business to Nishitetsu in Fukuoka. This connection between the three companies feels like fate.

Why did RAC, an EV bus manufacturer, choose to provide EV kits rather than sell buses?

Japanese buses are quite unique compared to global standards. They have right-hand steering wheels and are different in size. Developing a bus from scratch that meets Japanese specifications would take considerable time and expense. Instead of selling their own brand of buses, RAC was committed to partnering with companies around the world to sell their technology as a system.

These three factors came together perfectly: the challenges faced by Nishitetsu in converting buses to EVs, RAC’s desire to expand internationally and Sumitomo Corporation’s mission to solve social problems through new business ventures in the mobility sector. The retrofit EV bus project was possible because of this alignment.

Sumitomo Corporation’s Role in Uniting Partners and Pushing Toward a "New World"

Despite having strong partners, this was an entirely new endeavor, and there must have been significant challenges.

Manufacturing buses is not easy. To use Taiwanese parts in Japan, we had to meet local regulatory standards, and ensuring adequate space within the buses was also a challenge. Furthermore, during the pandemic, much of the communication with Taiwan shifted to remote channels, which made it difficult to envision the future of the project. At one point we even considered halting it due to uncertainty. But Nishitetsu encouraged us, saying, "This is a project we must pursue. We can overcome this together!" I believe the company's strong sense of mission is based on its corporate philosophy of improving safety and trust. Their words motivated me to take responsibility and move the project forward. Now that EV bus has taken shape is thanks to Nishitetsu's support and trust, and I am proud to have faced this challenge together.

From left, Takashi Tomoto of Nishitetsu Auto Body Tech Sales Department, Masaki Yamamoto and Naoya Tamura of Sumitomo Corporation Kyushu (on loan from Sumitomo Corporation Power & Mobility). The entire team – both technicians and sales reps from Fukuoka and Tokyo – are working together as one motivated unit.

Nishitetsu’s commitment must have been driven not only by the potential of the project but also by their sense of responsibility as the largest bus company in Japan, right?

Absolutely. Likewise, Nishitetsu Auto Body Tech also brought a strong sense of mission and a high level of awareness. Even when we made difficult requests, they responded so well, sometimes in heated discussions. I was impressed by how Nishitetsu and Nishitetsu Auto Body Tech, which is responsible for the technical aspects of the project, respected each other and worked together on the project.

Repairing and modifying buses is a tough, often underappreciated task. However, the people working on the ground take great pride in their work. For example the technicians at Nishitetsu Auto Body Tech have spoken about this project to their families, saying, "We’re bringing old buses back to life and contributing to decarbonization and resource recycling." It makes me so happy that not only our team at Sumitomo Corporation, but also members of other companies proudly shared their work with their families. Our success was possible because of the Nishitetsu Group. There is no doubt about that.

The project was supported by many internal and external backers, and it fostered a sense of unity that went beyond company boundaries. As a trading company, our role is fundamentally one of connecting people and businesses. But what I wanted was for both RAC and Nishitetsu to think, "I’m so glad we did business with Sumitomo Corporation."

We are often viewed as "people who eventually return to Tokyo," but we’re not working by the yardstick of Sumitomo Corporation HQ. Instead, we approach everything from standards in Fukuoka, and we focus on "work that will remain in Fukuoka." In the end, I believe that approach has contributed to the trust our partners now have in Sumitomo Corporation.

Bringing the Results of Fukuoka’s Pilot Nationwide: Promoting the EV Bus Transition with Team Japan Led by Sumitomo Corporation

How has the bus industry responded to retrofit EV buses?

At first, there wasn't very much excitement surrounding the retrofit bus project, but as buses converted by RAC started running in Japan in 2022, and then domestically assembled EV buses began running from Nishitetsu Auto Body Tech, I think perceptions started to shift.

That said, the business environment for local bus companies remains tough. They are likely overwhelmed with measures to address the shortage of drivers, and transitioning to EVs isn't always a priority. However, decarbonization is a common challenge for all bus operators. To protect transportation in rural areas and look to the future, I hope regional operators will start by implementing at least one EV bus.

What are Sumitomo Corporation’s plans for expanding this business? Please share your vision for the future.

There are approximately 30,000 large transit buses in Japan, but only around 300 are EVs (as of December 2024). By leveraging the retrofit model, we aim to accelerate decarbonization with Team Japan, led by Sumitomo Corporation, and involve bus operators and manufacturers to create momentum for EV adoption across the industry.

Our next goal is to expand the business model developed in Fukuoka to other regions and form second and third partnerships. We also want to strengthen our partnership with the Nishitetsu Group. Further, as EV buses become more widespread, we are looking to link this to new future businesses, such as second-life battery use and energy management. It has been about three years since we started this pilot. We are beginning to see the potential of this new market, and we’re excited for the future.

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