To break through the three-year stalemate in Japan, Chinese electric vehicle giant BYD launched the pure electric light car Racco in Japan on July 28 with a starting price of 1.95 million yen (about 80,000 yuan), challenging the Japanese market. However, facing the high loyalty of domestic brands and the disadvantage in Japanese government subsidy policies, whether BYD can achieve its goal of 10,000 Racco orders within the year remains a severe test.
BYD entered the Japanese car market in January 2023. By the end of 2025, it had sold only about 7,400 vehicles in about three years. Although sales in 2025 increased by 68% year-on-year to 3,742 vehicles, accounting for about half of the total sales over three years, this figure still represents less than 0.1% in Japan’s annual market of 4.5 million new vehicles. An insider from BYD revealed, “The performance of the Japanese subsidiary has been met with increasing dissatisfaction from the headquarters in Shenzhen, China.”
BYD set a target to achieve 10,000 Racco orders in the Japanese market by the end of this year to expand its foothold in the Japanese market.
In the market of pure electric light vehicles, currently the best-selling pure electric vehicle in Japan is the Nissan Sakura. The Racco introduced by BYD this time is in the same segment as Sakura, with a starting price of 1.95 million yen (about 80,000 yuan). Although priced slightly lower than Sakura, after deducting the subsidies received by the two cars respectively from the Japanese government, the actual price of Racco is slightly higher than Nissan Sakura.
According to the Japanese government’s electric vehicle subsidy policy, subsidies for clean energy vehicles (CEVs) will be further increased in 2026, with the maximum subsidy reaching 1.3 million yen (about 54,000 yuan). Among them, the basic subsidies received by Nissan Sakura, Tesla, Toyota bZ4X, and Nissan Leaf are close to the upper limit, ranging from 1.27 to 1.3 million yen (about 52,000 to 54,000 yuan); in contrast, all models under BYD (including Racco) receive a fixed subsidy of only 150,000 yen (about 6,000 yuan).
The main reason for such a huge difference in subsidies is not deliberate exclusion by the Japanese government of foreign car companies, but rather an official effort to encourage the development of the domestic battery industry. Authorities have reduced the weight of purely evaluating “vehicle performance” and significantly increased the proportion of scores related to “domestication and stable supply of batteries” and “ensuring important mineral sources”. Japanese domestic car companies and Tesla, which collaborates with Japanese battery giants like Panasonic, receive high scores, while BYD, mainly using batteries produced in China, receives lower scores.
In addition to being at a disadvantage in clean energy vehicle subsidies, it is widely reflected in the market that in over three years of entering the Japanese car market, BYD still has relatively low brand awareness and has not established a strong reputation.
An article in “Toyo Keizai” pointed out that private cars are usually considered durable consumer goods used for over ten years, and Japanese consumers have deep-rooted loyalty to domestic car companies and dealers. With limited brand recognition, BYD finds it difficult to enter the test drive and purchase lists of consumers. Additionally, the market share of pure electric vehicles (EV) in the Japanese new car market is only 1% to 2%, posing a significant challenge for BYD, which has always focused on pure electric vehicles as its main product lineup.