Chinese electric vehicle manufacturers are steadily penetrating Japan’s compact-car segment, a market long regarded as the stronghold of domestic brands. Their entry comes at a time when Japan’s shift toward electrification has been cautious and slow, making the recent developments particularly noteworthy.
At the 2025 Japan Mobility Show, Chinese automakers unveiled more than a dozen new energy vehicles, drawing widespread interest from industry observers. BYD, now a prominent foreign name in Japan’s EV market, showcased 13 models ranging from compact EVs to commercial vehicles. Among them, the Sealion Mini EV—engineered specifically for Japan’s kei car category—became one of the most talked-about debuts. The kei car segment, with annual sales of around 1.7 million units, is the core of Japan’s passenger vehicle market, and any newcomer targeting it signals a bold competitive move.
Analysts predict that the Sealion Mini EV, expected to launch in 2026, will offer a driving range of over 300 km, nearly double that of Nissan’s Sakura. Combined with a price estimated at 20%–30% lower than competing domestic models, the newcomer could reset consumer expectations in Japan’s most cost-sensitive category.
Japanese Carmakers Adjust Their Strategies
The growing presence of Chinese brands has already prompted Japanese automakers to accelerate their own EV development. Honda introduced six new electric models, including the compact N-ONE e:. Nissan showcased a Sakura equipped with solar panels designed to extend driving range, while Suzuki presented its Vision e-Sky, slated for release in fiscal 2026. Suzuki’s president openly stated that competition from BYD would serve as “a catalyst” for the wider adoption of compact EVs—an unusually direct acknowledgment from a leading domestic brand.
Despite these moves, Japan’s EV penetration remains low. Battery-electric and plug-in hybrid vehicles accounted for only 2.6% of new car sales in 2024, with forecasts for 2025 rising modestly to around 3.5–3.6%. Strong loyalty to domestic manufacturers and a long-standing reliance on gasoline vehicles continue to shape consumer behavior.
BYD Expands Its Local Footprint
Since entering Japan in early 2023, BYD has consistently adapted its approach to local preferences. With compact models and hybrids continuing to dominate demand, the company plans to introduce more plug-in hybrid and small EV options. As of October, BYD has opened more than 60 dealerships, with a target of exceeding 80 locations by year-end. The company is also expanding fast-charging infrastructure compatible with Japanese networks, addressing a key barrier to broader EV adoption.
Other Chinese manufacturers are preparing to follow suit. Geely’s premium EV brand Zeekr is reportedly working with Japanese distributors to enter the market, indicating that competition will only intensify.
A Market Entering a New Phase
Industry experts point out that the arrival of Chinese EV makers could accelerate Japan’s transition to electrification while opening new opportunities for technology and supply-chain collaboration. Japan’s strengths in materials and components complement China’s rapid progress in batteries, software, and high-volume EV manufacturing.
As Chinese brands carve out a presence in Japan’s compact-car stronghold, the competitive landscape is shifting. The next few years may determine whether Japan’s electrification pace remains gradual—or whether the push from new entrants becomes the turning point for a much faster transformation.
