With all due respect to Shinzo Abe’s family and colleagues, I’m just so done with the late politician’s era in Japan.

The former prime minister’s July 8 death—at the hands of a crazed gunman—generated a bull market in where-to-now stories. Odd really, as Abe’s nine years in power divided over two governments—one from 2006 to 2007, the other from 2012 to 2020—was more about returning Japan to the 1980s than propelling the nation forward.

Tokyo really should’ve left “trickle-down economics” in the past, which is what, let’s face it, Abenomics ended up being. Now, as the globe wonders what Prime Minister Fumio Kishida might do to reawaken Japan’s animal spirits, an unlikely inspiration is stepping forward: Elon Musk.

This suggestion might sound strange to readers observing the world’s richest man appear to destroy a company—Twitter Inc.—he claims he wants to buy. Or observing Tesla Inc. veer away from the big bitcoin stake Musk had been hyping.

Here in Japan, meantime, Musk managed to offend the masses with a May tweet about demographic Armageddon. Musk argued: “At risk of stating the obvious, unless something changes to cause the birth rate to exceed the death rate, Japan will eventually cease to exist. This would be a great loss for the world.”

Yet it’s Musk’s battery partnership with Japan Inc. icon Panasonic Corp. that holds big potential to change dynamics in an aging and uncompetitive nation. Almost singlehandedly, Musk is reminding Japan that its future should be less about making cars than profiting from investing in sustainable ways to power them.

Musk’s relationship with Osaka-based Panasonic is, well, complicated with lots of drama and ups and downs. A good starting point is 2014, when Musk set up his $5 billion Gigafactory in the Nevada desert. One of his first calls was to battery pioneer Panasonic. Over the last 104 years, few tech companies amassed a more storied history of innovation and reinvention.

Over the years, Panasonic gave the world cutting-edge appliances, lighting, radios, televisions and, most importantly, some of the most advanced research and development on compact and powerful rechargeable batteries.

Now, Panasonic is breaking ground on a massive $4 billion battery plant in Kansas to increase its bet not just on Tesla but on America’s accelerating shift to electric cars and trucks. According to Governor Laura Kelly, it will be among the most ambitious battery-plant projects in U.S. history and the “largest private investment in Kansas history.”

Yet Panasonic’s bet—and Musk’s doubling down on the company—also reminds Japan Inc. that the most lucrative industry of the present and the future is devising new ways for a few billion Asians to grow economies rapidly without choking. Panasonic is but one reason Japan seems uniquely qualified to lead the charge on carbon-neutral power sources.

Sadly, Abe and his Liberal Democratic Party spent the last 15-plus years doubling down on nuclear power. Yes, reactors produce renewable energy. But the Fukushima radiation crisis of 2011, and Japan’s vulnerability to seismic shocks in general, turned the population against nuclear power.

Abe spent his 2012-2020 premiership working to reopen reactors, not incentivizing alternatives. Since Russia’s invasion of Ukraine, surging energy prices have Kishida doing his own bit to get reactors back online.

Fair enough. But Kishida should be leaning into Musk’s interest in Japan’s economy, which trumps Warren Buffett’s investments here in recent years.

In August 2021, the “Oracle of Omaha” finally got over his infamous aversion to investing in Asia’s second-biggest economy. The $6 billion-plus bet made by the 91-year-old’s Berkshire Hathaway was in five old-school trading houses the world had largely forgotten: Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co. and Sumitomo Corp. That’s partly because some of them date back to the 1850s.

For Buffett, these “sogo shosha” businesses are diversified, cash-rich and unloved enough to make them a solid value investment. But the part of Japan Inc. that intrigues Musk holds far more promise to disrupt Japan’s change- and risk-averse corporate and political cultures—and create millions of high-paying jobs.

As post-Abe Tokyo picks up the pieces, Kishida should go big on reinvigorating Japan’s innovative engine. Panasonic, founded in 1918, is Exhibit A for discussions of how Japan Inc. once dominated global tech. Kishida’s first reform priority should be catalyzing a startup boom, particularly in the renewables space.

In recent weeks, Kishida laid the groundwork for allowing the $1.45 trillion Government Pension Investment Fund, the largest entity of its kind, to help raise Japan’s tally of tech “unicorns.” When it comes to producing startups valued at $1 billion or more to disrupt corporate systems, Japan is trailing India, Indonesia and South Korea by a wide margin.

Ironically, the globe’s most important venture capitalist is a Japanese national. And yet SoftBank Vision Fund’s Masayoshi Son deploys very little at home. Plenty in Bangladesh, Brazil, China, Columbia, Finland, India, Indonesia, Kenya, Spain and Taiwan. But only small amounts in aging, low-productivity Japan.

Kishida pledges to change that by aiming Japan not at 1985, as Abe did, but 2025 and beyond. Love his antics or not, Musk is showing Japan which sector holds the greatest promise.

Now, Kishida has his own election mandate to take out for a ride. He could do worse than take Musk’s hint and rechange Japan’s innovative batteries.


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