BYD takes on Japan’s ‘kei’ car market with tiny EV
Chinese company challenges Toyota on home turf in bid to become world’s largest carmaker in five years
China’s BYD is challenging Toyota and other Japanese carmakers in one of their most important market segments with the launch of its mini electric kei car.
The release comes soon after BYD’s founder and chief executive, Wang Chuanfu, announced a plan to topple Toyota as the world’s largest carmaker by sales within five years through rapid advances in charging technology and explosive overseas growth.
Its push into Japan, Asia’s second-biggest economy, is a key part of that expansion plan. BYD has become the world’s biggest EV producer but now faces slowing growth and rising competition in China, the world’s biggest car market.
Beyond aggressively expanding exports — helped by the construction of eight purpose-built ships to carry EVs — the carmaker is expanding its manufacturing footprint with new factories in Hungary, Brazil, Thailand, Indonesia and Uzbekistan.
BYD’s answer to the kei car — a class of boxy compact vehicles suited for Japan’s narrow roads and tight parking spaces — is the Racco, which the company said on Tuesday could cost less than ¥2mn ($12,000) after subsidies are taken into account.
On a full charge, it will offer a range of 210km to 320km, beating out best-selling Japanese electric kei models such as the Nissan Sakura.
Last year, Atsuki Tofukuji, president of BYD Auto Japan, told the FT that his company saw an opening for low-cost EVs of a similar size to “Mr Bean’s Austin Mini Cooper”, as high taxes push up conventional fuel prices and as petrol stations rapidly disappear in depopulating rural Japan.
Kei cars made up 36.5 per cent of new vehicle sales in Japan last year, according to the Japan Light Motor Vehicle and Motorcycle Association.
However, their popularity has also been driven by tax and insurance breaks for cars that do not exceed certain dimensions, contain an engine smaller than 660cc and have a power output of less than 47 kilowatts.
Despite its price point, BYD’s Racco faces an uphill battle in Japan, where foreign brands make up a small portion of sales. The Chinese carmaker sold only 3,742 vehicles in Japan last year, according to the company.
While up 68 per cent from 2024, it was only a fraction of the 4.5mn new cars sold in Japan last year, according to the Japan Automobile Dealers Association.
US President Donald Trump made his own pitch for kei cars last year, calling for US production of the “very small” and “really cute” vehicles during a White House announcement on fuel economy rules.