The Chinese automobile company BYD (BYD) is trying to gain its position in the Japanese electric vehicle (EV) market; However, in a market where just over one percent of the 1.47 million passenger cars sold in the first seven months of 2024 were electric, the Japanese auto giant faces serious challenges.
BYD, which has become China’s largest electric car maker, has adopted a multi-pronged strategy to boost sales in one of the world’s largest auto markets, Reuters reported.
In addition to installing more charging stations and increasing marketing campaigns, BYD is offering incentives to customers to purchase, however, weak demand for electric vehicles in Japan and recent changes in government subsidy calculations have made the market challenging for foreign automakers.
Asuki Tofukujipresident of BYD Japan, acknowledges the challenges: “Some people in Japan are very averse to Chinese products, so it’s not wise to try to impose yourself on them.” Instead, he’s trying to woo consumers with the BWD’s “affordability and performance.”
One of the challenges facing BYD is the lack of trust of Japanese customers in products made in China
To appeal to Japanese consumers, BYD has launched several advertising campaigns, including discounts on its new models and television commercials featuring celebrity actors. These efforts increase the Chinese company’s marketing costs.
Since the opening of its first showroom in Japan in February 2023 (Bahman and Esfand 1401), BYD has sold more than 2,500 cars and expanded the number of its showrooms to more than 30 showrooms.
Despite the low sales figures of BYD, these figures are comparable to some of the main market players. Toyota, the Japanese automobile giant, has sold just over 4,200 electric cars in this country, while Tesla has a stronger presence in Japan by selling nearly 17,000 cars by the end of March 2023 (March 1401 and April 1402).
BYD in Japan is grappling with various challenges, including consumer skepticism about Chinese-made products and the complex historical relationship between the two countries. These feelings in the comments of potential customers like Yukihiro Obata“The cars are great, but I don’t think they will sell in Japan,” said a 58-year-old man who visited the BYD show in Yokohama. The Japanese believe that Japanese-made goods are superior to Chinese and Korean ones. “We cannot believe that Chinese products are of higher quality.”
BYD
As another challenge, the Japanese government’s recent review of EV subsidies has also had a negative impact on BYD sales. The new scheme takes into account factors such as the number of fast chargers installed by manufacturers, which led to a reduction in subsidies allocated to BYD models.
For example, the subsidy for BYD’s Atto 3 SUV, which costs 4.5 million yen ($30,996), has been almost halved from 650,000 yen to 350,000 yen.
Similarly, the subsidy for the Seal sedan, whose rear-wheel-drive version is priced at 5.28 million yen, is now 450,000 yen. The Dolphin, which retails for ¥3.63 million, also includes a ¥350,000 subsidy.
Japan’s recent revisions have reduced subsidies received by BYD vehicles
An official from Japan’s Industry Ministry stated that the purpose of the subsidy change was to create an environment where electric vehicles could be used sustainably and “Japanese-style.”
This change affected not only BYD, but also other foreign car manufacturers such as Mercedes, Volkswagen, Peugeot, Volvo, Hyundai and even Subaru of Japan; Of course, Nissan, Toyota, and Tesla have not only maintained their subsidies, but in some cases have also seen them increase.
Tofukuji admitted that the reduction in subsidies has also reduced sales; So in response, BYD is adapting its strategy. The company plans to increase the amount of subsidies it receives by installing fast chargers in 100 locations by the end of next year. BYD also offers financial incentives such as interest-free loans and cashback for home chargers to attract customers.
Despite the aforementioned challenges, foreign car brands, including BYD, accounted for nearly 70% of electric vehicle sales in Japan in the first seven months of this year. This shows that there are still significant growth opportunities in the country’s electric vehicle market.
