BYD Re-enters the Japanese Market

At the end of last month, BYD launched a one - month price cut promotion in Japan. The price reduction, converted into RMB, is approximately between 24,200 and 56,700 yuan. The wind of the price war has finally reached across the Sea of Japan.

Throughout 2024, BYD's passenger car sales in Japan were only 0.05% of those in China. However, BYD attaches great importance to the Japanese market. At the press conference earlier this year, BYD's electric buses, electric trucks, and plug - in hybrid passenger cars were collectively unveiled in Japan, implementing the strategy of "at least one new model per year".

In early May, spy photos of BYD's K - Car were unexpectedly exposed, giving a big scare to the "whistle - blower" of the Japanese automotive industry, Nikkei.

As soon as Nikkei got the news of BYD's entry, it warned the industry with a bold and capitalized front - page headline: BYD will launch pure - electric K - Cars in Japan, aiming for a 40% market share.

Nikkei published a newspaper on the day of BYD's official announcement

The name "K - Car" comes from the Japanese "kei jidosha", which can be literally translated as "light motor vehicle". Although the global vehicle classification standards are diverse, K - Car is a unique feature of Japan.

Although it is smaller than the Wuling Hongguang MINI EV and only slightly more powerful than elderly - friendly low - speed electric vehicles, K - Car is a well - recognized regular in the Japanese automotive market. It not only has a legal status but also has a larger inventory than other vehicle models.

According to Nikkei[9], during the Japan Mobility Show in October 2023, Wang Chuanfu witnessed the popularity of chubby K - Cars on the streets and decided to enter the K - Car R & D field.

The exposed BYD K - car

Compared with the panicky Nikkei, the veteran media Asahi Shimbun is much more mature and steady, believing that Japanese automakers don't need to panic. There are three reasons:

1. The general image of Chinese cars is not good; 2. Chinese automakers don't know the Japanese market well enough; 3. Chinese automakers don't have an advantage in sales channels in Japan.

After entering the Japanese market in a high - profile way for two years, BYD has changed its approach.

The Overestimated "Black Ship"

BYD is a newcomer in the Japanese passenger car market but an old player in the Japanese automotive market.

In the field of pure - electric buses in Japan, BYD is an undisputed leader, holding a 70% market share[8]. Forklifts with the BYD logo also have a good reputation in Japan. However, in the passenger car market, BYD has long had a weak presence.

BYD forklifts and loaders

In 2022, the new - energy vehicle market in China boomed. BYD's automotive business underwent a substantial transformation. Its revenue scale increased from 200 billion to 400 billion at once, and the profit growth rate reached an astonishing 445.86%, achieving a perfect comeback from being a "low - end brand" to becoming the sales champion.

With sufficient resources, BYD not only invested heavily in intelligent technology but also targeted overseas markets. As the world's fourth - largest automotive market, Japan was naturally included in BYD's overseas expansion plan.

In March 2022, two BYD E6s with Kyoto license plates suddenly appeared in the Japanese taxi fleet, sparking speculation that BYD was entering the passenger car market. At that time, Hanada Shinsaku, the deputy general manager of BYD Japan (BYD JAPAN), firmly responded[1]: There are no plans to develop the passenger car business for the time being.

However, just two months after his statement, news of BYD's entry into Japan began to sweep through local media.

BYD E6s in the Miyako Taxi fleet

In 2023, BYD officially entered the Japanese passenger car market. Different from its strategy of large - scale production expansion in the Chinese market, BYD advanced steadily in Japan. It neither adopted a low - end strategy nor engaged in low - price competition.

The prices of BYD models launched in the Japanese market are generally 1.5 to 2 times those in China. After the price cut, the BYD SEAL (S Seal) is priced at 5.28 million yen (255,000 yuan), which is even higher than the Tesla Model 3 (5.13 million yen) and is far from being a cheap car.

BYD's first price cut in Japan in early April

To quickly increase brand awareness, BYD invited the national goddess Masami Nagasawa as its brand ambassador and aimed to double the number of sales outlets to 100. This high - profile offensive stance has made the Japanese industry restless.

Nikkei deserves credit for BYD's disproportionate influence in Japan compared to its sales volume.

In addition to constantly spreading the idea that "Chinese new - energy vehicles are out to get us" in the newspaper, Nikkei also disassembled a BYD Seal in detail, not sparing even the interior parts, front fenders, and roof linings. Finally, it condensed the findings into a 494 - page detailed report priced at 880,000 yen.

Coincidentally, the Central Japan Bureau of Economy, Trade and Industry disassembled 16 cars last year, including the BYD Seagull, Yuan PLUS, NIO ET5, and XPeng P5. It also held a special car - disassembly exhibition to display the results.

The Central Japan Bureau of Economy, Trade and Industry displays the results of car disassembly

The serious attitude of the academic and industrial circles gradually influenced the Japanese decision - making department, making the "BYD concern" a driving force for the reform of Japan's electric vehicle subsidy policy. Eventually, the Japanese government adjusted the policy last year, reducing BYD's per - vehicle subsidy from 850,000 yen to 350,000 yen.

The panic in public opinion and the vigilant stance of the industry seem to all point to BYD's seemingly irresistible offensive in Japan.

However, in reality, corresponding to this high - alert attitude is BYD's dismal sales in Japan.

According to data from the Japan Automobile Importers Association (JAIA), in 2023, the total sales of pure - electric vehicles in Japan were 88,535, among which BYD only sold 1,446. In 2024, the sales reached a new high of 2,223, which is about the same as BYD's half - day sales in China.

Blind Spots in Market Perception

Japan is a very special automotive market, and its special features are twofold: First, pure - electric vehicles don't sell well; second, imported cars don't sell well.

BYD is not the first imported pure - electric vehicle manufacturer to encounter difficulties. The Japanese market will fairly teach every overseas automaker that tries to make a splash. The previous one to pay the price was Tesla.

Before witnessing the power of Chinese manufacturing, Elon Musk predicted that Japan would become Tesla's second - largest market outside the United States. He produced right - hand - drive models for Japan as soon as possible and brought the Model S to the Japanese market in 2014.

In order to please Panasonic, the battery supplier, Musk even said the insincere words "the heart of Model S is Japanese" at the press conference.

The launch of Model S in Japan, with Elon Musk and Yamada Yoshihiko, the executive vice - president of Panasonic

After ten years, Tesla is still struggling in Japan. In January last year, after envisioning the grand blueprint of artificial intelligence in the earnings conference call, Musk couldn't help but complain about his confusion regarding "certain regions":

"In certain regions, such as Japan, our market share is very low. We should at least have a share comparable to that of Mercedes - Benz or BMW, but we don't."

In 2024, the total sales of all models of the three German luxury brands (BBA) in the Japanese market were approximately 120,000. Mercedes - Benz, which had the best sales, sold just over 4,000 cars per month. In contrast, Toyota sold 169,000 Corollas throughout the year.

Tesla, which once stirred up the Chinese market, also seems powerless in Japan. BYD's product strategy of prioritizing pure - electric vehicles in Japan has also led to the same kind of troubles that Toyota's pure - electric vehicles have faced in China.

The poor sales of electric vehicles in Japan is an old - fashioned topic. On the one hand, due to the lack of metal resources such as lithium, nickel, and cobalt, Japan has always regarded hydrogen energy as its transformation goal. However, hydrogen - powered vehicles are restricted by the high storage and transportation costs of hydrogen fuel, and their annual sales in the past three years have only been in the triple digits, making it difficult to promote them.

On the other hand, Japanese automakers started developing hybrid technology very early. Hybrid models such as the Toyota Prius have always been popular in the automotive market.

The combination of these two factors has, to some extent, led to the weakness of Japan's electric - vehicle infrastructure. In the first quarter of this year, the number of charging piles in Japan reached 68,000[4], which means there is one charging pile for about 1,800 people. In contrast, in China, there is one charging pile for every 110 people on average.

The dead - end of the hydrogen route and the slow development of pure - electric vehicles have promoted a situation in the Japanese market where fuel - powered vehicles and hybrid vehicles dominate.

Last year, the best - selling pure - electric vehicle in Japan was the Nissan SAKURA, with sales of 30,749, exceeding the total sales of the second - to - fifth - ranked models (Tesla Model 3, Mitsubishi eK Cross, BYD Seal, and Toyota bZ4X).

Nissan SAKURA

On the list of best - selling models in Japan, the Toyota Corolla has been the number one for 55 years. The top 20 best - selling models are all made in Japan. This is another special feature of the Japanese market: for whatever reason, overseas brands just don't sell well.

The Japan Automobile Dealers Association only counts the sales of single domestic models. The best - selling overseas brand in Japan is Mercedes - Benz, with total sales of 53,000 in 2024

In this situation, BYD is not challenging Toyota but the unique Japanese national conditions of "self - isolation". This is why, although Japan has had zero import tariffs on cars for a long time, it has been rated by Ford as the "most closed country".

Considering that Japan's goal of "100% electrification of new passenger cars by 2035" clearly includes "new - energy vehicles that can only be refueled" like the Toyota Prius in the electrification scope, the challenges BYD faces are even more complex.

In January this year, Liu Xueliang, the president of BYD JAPAN, revealed BYD's biggest dilemma in fluent Japanese: "It will take time for electric vehicles to be popularized in Japan."

One month later, BYD unveiled a series of plug - in hybrid models in Japan. Three months later, news of the pure - electric K - Car project spread.

Why K - Car?

In 2024, the Honda N - BOX sold