BYD Accelerates Market Penetration in Japan Despite Adverse Conditions

The Chinese electric vehicle manufacturer BYD, backed by Warren Buffett, is increasingly focusing on expanding charging infrastructures and extensive marketing efforts in Japan, one of the more challenging markets in its global expansion journey. Japan is considered a tough nut for foreign automakers as the demand for electric vehicles has long been sluggish and new government subsidy guidelines, which have reduced subsidies for BYD and its competitors, have raised protectionist concerns. To attract Japanese drivers, BYD is offering discounts on the first 1,000 units of its latest model and airing TV commercials featuring a Japanese actress. However, this strategy is leading to higher-than-expected marketing costs. Nonetheless, BYD's foray into foreign markets is being watched with great interest, as the company is almost as valuable as the US auto giants GM and Ford combined. Some Japanese remain skeptical of Chinese products due to quality concerns and historical tensions between the two countries. Yukihiro Obata, who visited a BYD showroom in Yokohama, expressed doubts about the success of Chinese vehicles in Japan. In addition to marketing efforts, BYD is continuously expanding its presence in Japan, having sold over 2,500 vehicles since opening its first showroom in February last year. By comparison, Toyota Motor sold slightly more than 4,200 battery electric vehicles in the same period, while almost 17,000 Teslas were registered in Japan by the end of March 2023. The government revised the subsidy policy for electric vehicles in April to promote the spread of charging infrastructures. Subsidies now consider criteria such as the number of installed fast chargers and after-sales service. These changes have led to a reduction in subsidies for BYD's Atto 3 SUV. In response, BYD is offering 0% loans and cashback promotions and plans to install fast chargers at 100 locations by the end of next year. Despite the increased marketing expenses, these measures are proving effective in attracting more customers. BYD's model offering in Japan includes the Seal Sedan and the Dolphin, both of which are affected by the new subsidy guidelines. Industry observers such as Zhou Jincheng of the research firm Fourin see the subsidy changes as an attempt by the Japanese government to protect the domestic industry. While overall sales of electric vehicles remain low, foreign auto brands accounted for almost 70% of sales in the first seven months of the year. Despite the reduced subsidies, Kyosuke Yamazaki, a first-time buyer in his 30s, opted for a BYD Atto 3 and was unimpressed by the state incentives.