In this paper, the economic impacts of technological innovations, such as electric and hybrid vehicles, in the automobile industry in Japan are examined. The automobile industry has developed environmentally friendly vehicles in the face of global warming issues and the exhaustion of petroleum. Conventional automobiles that use gasoline and diesel oil don't meet the demands of the future society. New generation automobiles will become popular in several decades so the industrial structure will be affected by the appearance of these automobiles. Since the Japanese economy strongly depends on the automobile industry, the appearance of technological innovations in the automobile industry influence not only the automobile industry but other industries. Especially industrial regions where the automobile firms are concentrated are affected by new technology. In this study, we explored the economic impacts of shifting the production system in the automobile industry from the conventional automobile technology to electric and hybrid vehicle technology using national and multi-regional input-output models. Shifting the production system by new technology was simulated by changing parameters of the input coefficients in the industry. This study showed the production of hybrid vehicles has a positive impact, but the production of electric vehicles has a negative impact on the Japanese economy when compared with the production of conventional vehicles. At the regional level, we observed that the production of hybrid vehicles has a negative impact on the economy of the Chubu region, but has a positive impact on other regions. On the other hand, the electric vehicle brings a positive impact to Tohoku, Kinki, Shikoku and Kyusyu regions. Finally, the results of this study suggest that the appearance of new environmentally friendly vehicles brings different economic benefits to each regional economy in Japan. JEL Classifications: R11, R15, R41