BYD electric vehicles

BYD’s bold expansion: Navigating Japan's tough market

BYD, China's largest maker of electric vehicles, is trying to make further inroads into Japan-one of the world's largest car markets despite increasing its market share. Although BYD has had tremendous success on its home turf, where it grew rapidly, Japan remains tough to crack.

This will overcome consumer skepticism, government subsidy cuts, and increased marketing expenses major hurdles that stand in the way of establishing a foothold in Japan.

Chinese products are the reason for setback

One of the main setbacks for BYD is this deep-seated skepticism towards Chinese products. Japanese buyers like 58-year-old Yukihiro Obata won't purchase major items from a Chinese company because, as he says, "Japanese products are better in quality." Even the historical tension between the two countries perpetuated the cautious attitude among Japanese buyers. This makes it even more difficult for BYD, which needs to turn consumers that are more adapted and inclined towards traditional Japanese and foreign brands like Toyota, Mercedes-Benz, and Tesla.

To overcome these, BYD has stepped up its marketing campaign in Japan, investing upwards of what was initially set out to increase brand awareness. The carmaker ran television ads featuring Japanese actress Masami Nagasawa and promised discounts on the first 1,000 cars sold, alongside consumer incentives such as 0% loans and cashback on home chargers. While the moves have raised eyebrows, the increase in marketing costs adds pressure to the expansion plans the company has in place.

Government subsidy another hurdle

The second hurdle for BYD is that the latest revision to the government's EV subsidy program makes things more difficult. While previously, the level of a subsidy was given mainly based on the performance of a vehicle, they nowadays include other elements such as the number of quick chargers installed by manufacturers and whether after-sales service is available or not.

In consequence, the subsidy for BYD's Atto 3 one of its main products-was cut by almost half, from 650,000 yen to 350,000 yen. The move has hit sales, with buyers seeking to maximize savings from EV purchases. To this end, BYD plans to have installed 100 quick chargers in Japan by the end of next year, positioning it to be qualified for higher subsidies and thereby making its vehicles more appealing to buyers.

But despite such challenges, BYD has forged some ways into Japan. It has sold more than 2,500 cars since opening its first showroom in the country last year. BYD has expanded its product lineup, including the Seal sedan and the Dolphin, both of which come with government subsidies. Sales, however, remain modest compared with those of local giants like Toyota, which sold more than 4,200 electric vehicles in Japan during the same period, while Tesla sold around 17,000 units.

Road ahead is difficult

Entering the Japanese market is a serious component of its strategy to go global. Industry watchers have eyed this company, now nearly valued as high as American giants General Motors and Ford put together. Convinced it has a winning combination of affordability and performance supported by strategic marketing, BYD is determined to make a dent in Japan. Yet, the road ahead could still be somewhat bumpy as BYD continues to fight consumer skepticism and regulatory hurdles in its quest to become a global leader in the EV industry.