Japan can't build the batteries for BEV's at the necessary scale for global production. Yes China controls lithium but they also control some 95% of global battery grade graphite production, and anywhere from 60% to 90% production of manganese, cobalt, and nickle. Not to mention all of the components that those produce like the anodes and cathodes.
And the big problem with that is the Japanese genuinely fears there's going to be a war in the pacific. A big one. Fearful enough that Japanese government allocated $320 billion USD to be spent from 2024 to 2029 specifically to turn the JSDF into a proper military, and establish and sustain a new domestic military industrial complex.
The main flashpoint the Japanese are afraid of is a Chinese military attack on Taiwan, which leads two major possibilities. Either the US intervenes with the military, or it does not.
If the former, then China has to find a way to take away as many of the US Navy's advantages as they can. One of which is the major resupply facilities for the US 7th fleet in Yokosuka. Push comes to shove then I have little doubt that the Chinese will launch missiles into the Japanese harbors to deny the USN and JMSDF capability of repair and rearming via kinetic means. But I'm certain they'd prefer to pressure the Japanese into reducing or removing the US presence from Japanese docks.
Pressure like say being able to potentially cripple 10% of Japanese GDP that's in it's automotive sector if hypothetically Japan was dependent on Chinese exports of BEV batteries. Not exactly with precedent either; China tried to cut off Japan from rare earth metals once (admittedly that backfired on China) and China's recently put on export license restrictions on graphite.
Like it or not, the Japanese know it, the Chinese know it, and even the US is fully aware of it. The US is right now building new US navy bases in the Philippines just in case Japanese harbors become denied to the USN. Also why the Japanese are building up it's capability to strike not just far off Chinese naval assets but potentially into the Chinese mainland as well; the first an order for 500 US made Tomahawk missiles are already being installed right now on JMSDF destroyers.
On the other hands, if it's the former and the US chooses not to intervene... well it's gonna get very lonely for Japan out there all by itself.
You know the really sad part though? The Japanese were relenting a bit because they signed the US Japan Critical Minerals Agreement in 2023 which in effect promised no undue burden for the Japanese to get access to critical minerals. They just didn't dive head in because it was signed under the Biden administration.
Given the Trump administration's open hostility to BEV's, his erratic trade policies, and his open musing about withdrawing from mutual defense agreements (normally NATO but not a stretch to think he'd extend that to the Japanese US one as well I don't think they've made the wrong choice. Or rather more accurate that it's the least risky choice out of a bunch of awful choices.