Japan signed a critical minerals trade agreement with the U.S. looking to qualify for EV tax credits, but its EV production is still lagging behind.
Sony Honda Mobility CEO Yasuhide Mizuno speaks at a news conference in Tokyo, on Oct. 13, 2022. Sony and Honda's joint mobility venture unveiled a new EV prototype in January. Kiyoshi Ota | Bloomberg | Getty Images Japan is gearing up to be a larger player in the EV space by signing a critical minerals trade deal with the U.S., but it has a lot of catching up to do and resource restraints could slow its progress. Tokyo in March signed the U.S.-Japan Critical Minerals Agreement, securing both countries' commitment to strengthen supply chains and promote EV battery technologies. Notably, the deal allows minerals from Japan to meet sourcing requirements for U.S. electric vehicle tax credits, unlocking up to $7,500 per vehicle. The U.S. signed the Inflation Reduction Act in 2022, which subsidizes the domestic production of electric vehicles and batteries. The critical minerals agreement was "negotiated in warp-speed time" when similar deals "usually take years," David Boling, Eurasia Group director for Japan and Asian trade, told CNBC. Japan urgently desires to meet these requirements, but "Japanese auto firms have a lot of catching up to do on electric vehicles, if they want to be major players," said Boling, who previously served as a trade negotiator for the Office of the U.S. Trade Representative, working on Japan-related deals. Playing catch-up watch…