Authorities are now considering a hydrogen-powered transport system developed by China's state-owned railway company CRRC, as well as alternatives from Japanese firms.
The Chinese Autonomous Rail Rapid Transit (ART) resembles a tram with its different sections but has more in common with a bus, running on rubber tyres and on a road instead of rails.
The "Fuji Tram" option would reduce construction cost significantly while still allowing the authorities to control overcrowding during summer and reduce CO2 emissions, Yamanashi governor Kotaro Nagasaki told a press conference, as he unveiled the project.
"While paying due respect to the leading company, my wish is for Japanese firms to take up this project and it would be even better if their production base would be located in Yamanashi," he said.
The number of visitors to Japan's most famous mountain has exploded in recent years and authorities have struggled to reduce the environmental impact.
Crowd control measures and an entry fee of 2,000 yen ($13) succeeded in limiting the number of people climbing up Fuji this summer to around 178,000 climbers, according to preliminary figures, compared to more than 200,000 last year.
Authorities in Yamanashi, on the volcano's most popular side, announced plans in 2021 to build the light rail transit system to the so-called fifth station at 2,305 metres (7,562 feet).
Currently people can drive up a toll road to this point, from where they walk with the crowds to the 3,776-metre (12,388-foot) summit.
The cost has been estimated at 140 billion yen ($900 million) while an interim report last month highlighted technical challenges including brakes and batteries that work in cold weather.
Some local citizen groups have also highlighted the potential damage to the environment.
The tram, the governor said, would link the volcano with a regional station and is expected to come online in 2034 or later.
A feasibility study will be carried out before being officially presented to local residents, Nagasaki said.
An unprecedented number of tourists are flocking to Japan, which says it wants to welcome 60 million visitors a year by 2030, around double 2019's full-year record.
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