The recent holiday season has brought two major, perhaps landmark, automotive news stories from Japan. The first is obviously the potential merger of Honda and Nissan. Lots of commentary and punditry out there on how that will work out, so I’ll pass on offering any of my own. But the other major story, less well-known, was Chinese-owned electric vehicle manufacturer BYD launching a significant new sales effort here in Japan – let’s talk about that one…
I’m sure Curbsiders are familiar with BYD – one of the top two largest manufacturers of EVs in the world. It just missed overtaking Tesla in the number one slot – results for 2024 were released this week showing BYD sold 1.76 million BEV cars for the year. Tesla’s total 2024 output was 1.79 million.
However, if you add their hybrid (HEV) models, BYD’s total annual sales were 4.27 million, which includes their bus and truck EVs.
BYD first entered the Japanese market in Jan 2023 in a very low-key manner. It stayed fairly low-key through 2024 with only 1084 vehicles sold during the first half of this year. But that changed in the third/fourth quarter – a new large, splashy marketing campaign was launched starring a popular Japanese actress. The company also offered “0%” financing and cash-back on home chargers. BYD then upped its 2025 forecast for Japan to 30K vehicles.
BYD has obviously determined it can crack the Japanese EV market, and it must have market research confirming that assessment – but it faces quite a few challenges.
History: While Europe has largely moved on from its WW II hostilities, in Asia they remain deeply seated. Japan occupied large portions of China starting in the 1930’s and then there was that unfortunate incident in Nanjing. The Chinese government, in an effort to stoke nationalism and to distract the public from its own shortcomings, routinely demonizes and “bashes” Japan. It also keeps the memories of WW II alive through yearly ceremonies and an active publicity campaign. Latest surveys show 87% of the Chinese public hold a negative impression of Japan. This, in turn, along with Chinese claims to several Japanese southern islands, has led to the Japanese public having a 89% negative impression of China. Will this negative impression carry-over to Chinese-built autos? We’ll soon see…
Consumer Quality Perceptions: While smartphones and other electronics have improved Japanese views of Chinese manufacturing ability and quality, there is still a perception that China produces mostly cheap knock-offs. It remains to be seen if the public will “buy-in” to a Chinese-designed and assembled automobile.
Reduced Government Subsidies: Japan only imposes a 10% tariff on Chinese-built goods, to include EVs – much lower than the US and most of Europe. But it has recently modified the subsidized incentive it provides to EV buyers to one which favors manufacturers with a larger in-country presence such as the domestic brands and Tesla/Mercedes/BMW/etc.
Perhaps BYD determined that if it can “crack” Japan, then if it can succeed in other tough markets like the US and Europe, once the tariff issue is addressed.
Here in Japan, it will be an interesting experiment to watch unfold…hopefully I’ll be able to provide a “how it went” update around this same time next year.
Please keep us posted! I’ve been curious about development of Chinese car presence in Japan since I saw online that, I think, Kyoto had BYD buses, some 10 years ago, maybe. Products like the Seagull look really fitting for Japan, but the fact that the Japanese seem to be happy enough with the efficiency of their petrol kei cars and not in a rush for a switch to electricity. Charging might be a hassle too for people living in flats, I imagine.
But is someone has the resources, the product and the ambition to try, is BYD. They might be in there for the long term, just like Toyota and Nissan entering the US in the 50s and 60s.
Finally, I wonder if, in the case BYD has success in Japan, we’d see the likes of Toyota getting deeper into EVs.
Time will tell!
It is likely inevitable, China will become a significant/dominant part of the Japanese EV market. China has already surpassed the US, Germany, and South Korea, in auto exports. And expects to replace Japan in the coming months, as the world’s biggest car exporter. China already leads the world in green technology, robotization advancement, and battery technology. China has cleaned up its act. And leads the world in climate change green energy action, and adoption. Accounting for 80% of the world manufacturing investment, in this area.
BYD can make high-quality electric vehicles for less than $10,000 US. Thanks to their quantum advancements in EV technology, and manufacturing techniques. Tens of thousands of dollars more affordable than EVs, made in the US. Helps explain why billionaire oligarchs like Elon Musk, want heavy tariffs on Chinese EVs.
They can’t complete. Aided already by our corporations sending so many of our manufacturing (and jobs) to China, decades ago. They helped make China the manufacturing and technology Goliath, it has become.
When it comes to the Japanese auto market, I wouldn’t say anything is inevitable. Only the premium German brands ever made significant headway there, and that’s to the very deeply established reputation those brands had for engineering excellence back when they started out selling in Japan in significant numbers in the 1980s.
China exceeded Japan as the #1 auto exporter back in 2023.
BYD can sell cars for $10,000 in China, but that’s for two big reasons: government incentives and because they are losing money on them. Yes, almost every EV maker in China is losing money; this is precisely why they are all rushing to sell oversees, at much higher prices in order to try to make some profit.
BYD’s profits are assumed to all or mostly come from their gas-electric hybrids and their battery sales.
BYD does not have “quantum improvements in EV technology and manufacturing techniques”. They have steadily improved certain details and aspects, and grown their volumes, allowing them to keep costs in line. BYD and others learned much of these from Tesla, which operates what is widely considered to be the most efficient EV plant in the world in Shanghai.
Since March of 2024 Musk has been advocating for the removal of import tariffs on Chinese EVs.
Elon builds his cars in China of course he doesnt want a 100% orange tax on them we are a tiny market for cars BYDs are everywhere you go, Japanese EVs & PHEVS are everywhere, Tesla is learning from the Chinese not the other way round their mobile laptops are being left behind.
You are misinformed. All Teslas sold in the U.S. are built in the U.S. They would not be subject to any tariff. There are two production plants for cars and trucks, one in California (Y, 3, X, S) and one in Texas (Y, CT currently, 3 to be added this year).
The rest of the world gets some of their Teslas from the US, some from Shanghai, and some from Berlin, depending on model and market served.
If you get a Model S, Model X, or truck anywhere in the world, then those came from the US (California and Texas) by default. If you live in the U.S., any Tesla sold was produced in the U.S.
Musk did switch his position on tariffs. He also heavily financed Trump’s campaign. As Trump is immediately pushing for high tariffs. Coincidence?
As Musk appears to have abused the H-1B visa program.
As Wikileaks revealed of Hillary Clinton: Public figures will have their public positions. And their often 180 degree opposing private positions, on vital topics. To garner public favour, and earn trust.
Thanks for this overview. I agree with your assessment that BYD thinks that if it can “crack” Japan, then it’ll have a springboard to other markets. I’m curious to see if the ad campaign and other PR moves pay off.
That assessment is a bit off, as BYD is already very much in other markets all over the world except specifically in the US due to tariffs. And it has been for several years, so Japan is actually one of the last markets they’ve chosen to enter. And in any case, Japan is not a good indicator of success elsewhere, because of the reasons Jim gave (anti-China sentiment) as well as the fact that Japan has been extremely slow to adopt EVs.
BYD is building factories overseas and exporting very large quantities of cars. They just put their second dedicated auto carrier ship online. Their momentum is extremely powerful at the moment. Even if Japan doesn’t pan out for them, it’s largely irrelevant to their growth.
Thanks for the information. The Chinese EV topic isn’t one that I’ve followed closely, so I appreciate reading yours and Jim’s takes on various angles of this topic.
The attached is why I do not like electric vehicles. In the late 1800’s through the 1930’s, these vehicles were not using lithium ion batteries. True, they did not go very fare. Streetcars were also equipped and were recharged each night at the carbarns across America. The current technology is not safe in my opinion.
File did not attach the first time.
Although everyone is in a panic over Chinese EVs, it may be premature. Two of the three worst EVs for reliability in the UK are MGs. There’s worrying reports about wayward software as well which suggests corners are being cut to achieve the unheard off short development time.
The BYD SeaLion 7 has received a universal pasting as not being anywhere near competitive. It’s not alone. It takes more than computer simulations to build a car Add in the tariffs and I can see the rest of the world quickly catch up.
You punted on the proposed Honda-Nissan merger. That’s a big one, and it’s hard to see why Honda is doing this other than being pushed by MITI. It’s very hard to see how Honda has any upside; it sounds like a bail out, pure and simple. A bit sad, as Honda has always been so proudly independent. But the world is changing, and this feels like a retrenchment to try to prop up the two of them (and likely Mitsubishi) against the onslaught from Japan.
Nissan sure has had a rocky ride for a very long time. There’s something about their corporate culture going right back to the ’50s and ’60s that conspired against them. They never had the kind of single-minded strong leadership that Toyota and Honda had. Their internal politics, with the huge power their union held, was mostly often in turmoil. Ghosn tried shock therapy, which worked for a while, but in actuality he just set them up for the fall. His completely unrealistic sales/market share goals in the US resulted in a huge debasement of the brand’s image and majored negative fallout with their dealers. Cutting costs and setting unrealistic demands only goes so far.
I didn’t want to veer too far off the track Paul so didn’t opine on the merger but I agree with your take, as do most auto analysts here. The government “highly encouraged” Honda to merge. You may have seen a recent interview where the Honda CEO was asked point blank what were the advantages to this merger – he couldn’t provide any.
https://insideevs.com/news/745625/honda-nissan-merger-struggling-reason/
It appears the fear was Nissan being acquired by Hyundai or one of the Chinese conglomerates. A US or European takeover, as has happened before, would have been unfortunate, a takeover by a fellow Asian competitor unthinkable.
There’s still quite a bit of skepticism here regarding if the two cultures can actually merge.
I have to agree, Honda has always been fiercely independent, I think the Japanese government is pushing this. Soichiro is turning in his grave.
I was a bit surprised when Honda jumped into bed with GM for EVs. Their current EV, the Prologue, is a Chevy under the skin. But it hasn’t turned out that well, as Honda has cancelled that agreement. They’re going to develop their own EVs.
It is being reported by the “Electric Viking” YouTube channel that the Honda Prologue was the 3rd best selling EV in the USA in the 4th Quarter of 2024, so I would not say the Prologue has been a failure. The Honda outsold the Chevy version of the same basic EV in the 4th Quarter, even while being sold for a higher MSRP, according to the Electric Viking.
I think that’s as accurate an assessment of the Honda Nissan ‘merger’ I have read so far.
What are the electricity prices in Japan, how is it produced, ( for the sake of all, protect these nuclear power plants from tsunamis ) and the electrical infrastructure outside urban centers can support this additional demand ???
Japan’s electricity prices are slightly more expensive than in the US – .21 per kilowatt hour vs .18 in the US.
https://www.statista.com/statistics/263492/electricity-prices-in-selected-countries/
Power is provided by a mix of geothermal, oil, gas, and nuclear. Japan is quite resource poor and relies on imports for most of its energy needs. In my view, the infrastructure is quite robust and could handle the demand from an increase in EVs.
It is unfair to say BYD success is totally due to Chinese government subsidy. A lot of sectors in China has subsidy from government various programs. In actuality, Tesla Shanghai also got local government subsidy on land and other breaks on regulation and tax. The irony is BYD in reality has gotten much less subsidy from China government than its rival, CALT.
The story is few years ago Chinese government took initiatives to transfer its industries into green energy. For lithium battery, it offered government subsidy based on the battery density, BYD has long been devoting on the LFP battery for safety, but is less energy density. So it has gotten far less money from government than its main rival, CALT, which prefers the lithium battery with cobalt with much higher energy density.
I think BYD success is partly due to its business model. Warren Buffet recognized this when he invested in this company decades ago. BYD current accomplishment now proved Buffet made the right decision. More significant, BYD did this while China economy turns into the slow growth period, it has no access to US car market.
Fascinating that the old conflict is still manipulated this way. In this place, by 1965, just 20 years after a war in which Japan bombed the northernmost city, fought Oz soldiers bitterly in South East Asia, and treated POW’s on the Burma Railway with murderous hatred, folk were buying Japanese cars in good numbers – that’s just 2004 to now in today’s money! And it’s not as if arrogant and racist tropes about the Japanese were not promoted as part of the noble Aussie soldier story right into my time. My theory is that there was such universal trauma from the war that heaps of people CHOSE to forget, and to move on, almost certainly for the better.
I think you (Jim) or T87 has mentioned that due to old hatreds, Korean cars basically don’t exist in Japan, so BYD will need to change a culture, which seems unlikely.
For what it’s worth, BYD have been here since 2023, and are already the second-best seller behind Tesla in electrics. I have not driven one. But as static displays, and to sit in, I can report that the quality of finish is stonkingly good. Complaints of major fails haven’t been prominent yet, and that level of finish might suggest that isn’t going to happen.
The politics of this stuff is very labrythine, but the BYD cars, objectively, seem quite excellent.