In the Aichi prefecture of central Japan, which is home to Toyota Motor and its suppliers, startups creating future modes of transportation like drones, space aircraft, and flying cars are starting to appear. These startups are motivated by a need to promote industrial momentum in the face of obstacles posed by the entry of electric vehicles.

Aichi was a wise choice for PD Aerospace, a start-up company with the goal of developing private space travel.

CEO Shuji Ogawa stated, “Auto businesses share a sense of crisis,” referring to the predicament engine components manufacturers are in as a result of EVs. “Both Toyota and smaller companies appear to view aerospace as a cutting-edge field in which they can apply their development of engines and decarbonized fuels.”

“Auto businesses share a sense of crisis,” said chief executive Shuji Ogawa, that EVs have put engine parts makers in a plight. “Toyota, as well as smaller companies, seems to have expectations for aerospace as a cutting-edge arena where its development of engines and decarbonised fuels can be utilised.”

His company processes the parts needed for space plane prototyping at local companies, the majority of which are Toyota partners. In an effort to find areas of cooperation, it has also held discussions with Toyota and significant car component producers including Denso and Aishin, both of which are a part of the Toyota Group.

In addition, one of the startup’s backers is Toyota Tsusho, the Toyota Group’s trade division. “Toyota affiliates have a strong presence in the community, and their actions can have an impact. Having part of their capital gives us more credibility when it comes to fundraising or recruiting,” said Ogawa.

Since before World War II, the prefecture and its neighbors have served as a national center for the manufacture of airplanes, and they currently want to restore the sector’s status as an economic mainstay.

Leading the charge towards these aspirations was Mitsubishi Heavy Industries’ public-private initiative to construct tiny jetliners. But last year, slow progress and growing losses caused the 2008-started Mitsubishi SpaceJet project to go awry.

Aichi now sees future transportation technology start-ups as the next big forces behind the industrial expansion of the area.

As it gets ready to construct Station Ai, a startup incubation center, in the prefectural capital of Nagoya in October, the local administration intends to build on that enthusiasm. SoftBank designed and is running the facility with space for roughly a thousand start-ups.

The prefectural government began a collaborative endeavor in 2023 with four mobility start-ups, Jtekt, a firm connected to Toyota, and Nagoya Railroad. Accelerating “air mobility”—such as drones and flying cars—and improving their autonomous functioning are the goals.

Prodrone, a 2015 startup that is currently creating load-carrying drones known as “flying pick-up trucks,” suggested the initiative. According to CEO Shunsuke Toya, Aichi is a “juicy” location for a corporate headquarters.

“We can find all the skilful engineers we need. We also employ a few who used to work for Mitsubishi Heavy,” said Toya. Local companies have “outstanding, world-class” skills in processing the key aircraft materials of carbon fibre material and aluminium, and “being close to them means getting tasks done quickly”, he said.

Echoing Ogawa of PD Aerospace, Toya highlighted the region’s “cohesive culture” as a special asset. “There is a mutual support system that has helped us in fundraising and other stages,” he said, referring to the prefectural administration as well as local banks, universities, and start-ups like us.

Aichi officials in charge of startup assistance stated that major corporations’ involvement will be crucial. In order to do that, the new incubation center intends to house both domestic and foreign established businesses in addition to start-ups.

Ogawa says the prefecture needs to think about ways to improve financial support. In contrast to Tokyo, he remarked, “it’s hard to raise money or find people to consult on strategy here. Effective fundraising and capital policies are vital to start-ups.”

“Aichi’s entrepreneurship has mostly been weak but will probably grow from here with Station Ai and other initiatives,” said Toya. “The region is capable of solid manufacturing, so solid start-ups should emerge as well.”