At the end of last month, BYD Company Limited initiated a month-long promotional campaign in Japan with price reductions equivalent to approximately 24,200-56,700 yuan in Chinese currency, bringing the price war winds across the Sea of Japan.

Throughout 2024, BYD's passenger vehicle sales in Japan represented merely 0.05% of its Chinese market performance. However, BYD's commitment to the Japanese market remains significant. At the beginning of this year's launch event, BYD showcased electric buses, electric trucks, and plug-in hybrid passenger vehicles collectively in Japan, implementing the strategy of "at least one new model every year."

By early May, spy photos of BYD's K-Car were unexpectedly leaked, causing considerable concern among Japanese automotive industry observers.

Upon intercepting news of BYD's market entry, industry publications immediately issued bold front-page warnings to the automotive sector: BYD plans to launch pure electric K-Cars in Japan, targeting a 40% market share.

K-Car derives its name from the Japanese term "kei jidosha," which translates directly as "light automobile." While global vehicle classification standards are diverse, K-Car represents a distinctly Japanese category.

Despite being smaller than the Wuling Hongguang MINI EV and having only marginally better performance than neighborhood electric vehicles, K-Car represents the undisputed regular army of Japan's automotive market, possessing legal status and maintaining higher ownership numbers than other vehicle types.

According to industry reports, Wang Chuanfu witnessed the prevalence of white, compact K-Cars throughout Japanese streets during his participation in Japan's mobility exhibition in October 2023, leading to his decision to develop K-Car models.

Compared to the alarmed reactions from some media outlets, established publications like Asahi Shimbun maintained a more measured perspective, suggesting Japanese automakers need not panic. Their reasoning included three points:

1. Chinese automobiles generally have a modest image 2. Chinese automakers lack deep understanding of the Japanese market 3. Chinese automakers lack sales channel advantages in Japan

After two years of high-profile entry into the Japanese market, BYD Company Limited has adopted a different approach.

**The Overestimated "Black Ship"**

BYD represents a newcomer in Japan's passenger vehicle market while simultaneously being an established player in Japan's broader automotive sector.

In Japan's pure electric bus segment, BYD maintains undisputed dominance with a 70% market share. BYD-branded construction equipment has also earned widespread recognition in Japan. However, in the passenger vehicle market, BYD has maintained a relatively low profile.

In 2022, China's new energy vehicle market experienced comprehensive growth, leading to substantial transformation in BYD's automotive business operations. Revenue surged from 200 billion to 400 billion yuan, with profit growth reaching 445.86%, orchestrating a perfect turnaround from budget brand to sales champion.

With abundant resources, BYD simultaneously invested heavily in intelligence technology while targeting overseas markets with significant capital. Japan, as the world's fourth-largest automotive market, naturally became part of the overseas expansion strategy.

In March 2022, two BYD E6 vehicles with Kyoto license plates appeared in Japanese taxi fleets, sparking speculation about BYD's entry into the passenger vehicle market. At that time, Shinsaku Hanada, Vice President of BYD JAPAN, firmly responded that passenger vehicle business development was not under consideration.

However, just two months after this statement, news of BYD's advance into Japan began dominating local media.

In 2023, BYD officially entered Japan's passenger vehicle sector. Unlike the large-scale expansion tactics employed in the Chinese market, BYD adopted a cautious approach in Japan, avoiding both low-end positioning and low-price competition.

BYD's vehicle models in the Japanese market are priced at approximately 1.5-2 times their Chinese equivalents. After price reductions, the BYD SEAL is priced at 5.28 million yen (255,000 yuan), higher than the Tesla Model 3 (5.13 million yen), far from being considered an economy vehicle.

To rapidly enhance brand recognition, BYD engaged national actress Masami Nagasawa as spokesperson while advancing plans to double sales locations to 100 stores. This high-profile offensive strategy was sufficient to cause concern within Japan's industrial sector.

BYD's ability to achieve influence disproportionate to its sales volume in Japan can be attributed significantly to media attention.

Beyond daily proclamations about Chinese new energy vehicles' competitive threats, media outlets personally dismantled a BYD Seal completely, examining every component from interior parts to fender guards and roof linings, ultimately producing a detailed 494-page report priced at 880,000 yen.

Similarly, Japan's Chubu Bureau of Economy, Trade and Industry dismantled 16 vehicles last year, including BYD Seagull, Yuan PLUS, NIO ET5, and XPeng P5 models. They organized a special dismantling exhibition to showcase their findings.

The serious posture of academic and industrial circles gradually influenced Japanese policy-making departments, making "BYD concerns" a driving force for electric vehicle subsidy reform, ultimately compelling Japanese authorities to adjust policies last year, reducing BYD's per-vehicle subsidy from 850,000 yen to 350,000 yen.

Media vigilance, industrial preparedness, and policy responses all seemed to point toward BYD's unstoppable momentum in Japan.

However, contrasting with this defensive posture, BYD's actual sales performance in Japan could be described as "dismal."

According to Japan Automobile Importers Association (JAIA) data, Japan's total pure electric vehicle sales reached 88,535 units in 2023, with BYD accounting for only 1,446 units. In 2024, this figure reached a new high of 2,223 units, roughly equivalent to half a day's sales in China.

**Market Recognition Blind Spots**

Japan represents a highly unique automotive market, characterized by two distinctive features: pure electric vehicles struggle to sell, and imported vehicles face similar challenges.

BYD is not the first imported pure electric vehicle manufacturer to encounter difficulties. The Japanese market impartially educates every overseas automaker attempting ambitious expansions, with Tesla being the previous tuition payer.

Before witnessing Chinese manufacturing capabilities, Musk predicted Japan would become Tesla's second-largest market outside the United States. Tesla immediately produced right-hand drive models and introduced the Model S to the Japanese market in 2014.

To court battery supplier Panasonic, Musk even made the insincere statement during the launch event that "Japan is the heart of Model S."

Ten years later, Tesla continues struggling in Japan. Last January, after outlining artificial intelligence visions during an earnings call, Musk expressed bewilderment about "certain regions":

"In some regions, like Japan, our market share is very low. We should at least have market share comparable to Mercedes or BMW, but we don't."

In 2024, the three German luxury brands (Mercedes, BMW, Audi) sold approximately 120,000 vehicles total across all models in Japan, with Mercedes achieving the best monthly performance of just over 4,000 units. By comparison, Toyota sold 169,000 Corolla units alone throughout the year.

Tesla, which once stirred China's market as a catalyst, also faces diminished prospects in Japan. BYD's pure electric priority product strategy in Japan ultimately experienced the same frustrations Toyota's pure electric vehicles face in China.

Japan's electric vehicle sales challenges represent a long-standing topic. On one hand, lacking lithium, nickel, and cobalt resources, Japan has consistently positioned hydrogen energy as its transition target. However, hydrogen fuel vehicles, constrained by storage and transportation costs, have achieved only three-digit annual sales figures over the past three years.

On the other hand, Japanese automakers pioneered hybrid technology very early, with Toyota Prius-type hybrid models remaining automotive market stalwarts.

These factors combined have contributed to Japan's weak electric vehicle supporting infrastructure. In the first quarter of this year, Japan's domestic charging station count reached 68,000 units, equivalent to approximately 1,800 people per station. By comparison, China averages 110 people per charging station.

The hydrogen route's dead-end collision and pure electric vehicles' struggling progress have promoted a market structure where gasoline and hybrid vehicles divide Japan's automotive landscape.

Last year, Japan's best-selling pure electric vehicle was the Nissan SAKURA, with 30,749 units sold, exceeding the combined total of positions 2-5 (Tesla Model 3, Mitsubishi eK Cross, BYD Seal, Toyota bZ4X).

On Japan's bestselling vehicle rankings, Toyota Corolla has maintained first place for 55 consecutive years, with the top 20 positions exclusively occupied by domestic products. This represents another unique characteristic of the Japanese market: regardless of reasons, overseas brands simply cannot achieve strong sales.

Japan's best-selling overseas brand is Mercedes, which sold 53,000 units combined in 2024.

Under these circumstances, BYD challenges not Toyota, but Japan's "closed-door self-entertainment" national conditions. This explains why Japan maintains zero import tariffs on automobiles yet is rated as the "most closed country" by Ford.

Considering Japan's "2035 passenger vehicle 100% electrification" goal explicitly includes Toyota Prius-type "fuel-only new energy vehicles" within electrification scope, BYD faces increasingly complex challenges.

In January this year, BYD JAPAN President Liu Xueliang revealed BYD's greatest challenge in fluent Japanese: "Electric vehicle popularization in Japan still requires time."

One month later, BYD showcased multiple plug-in hybrid models in Japan. Three months later, news of the pure electric K-Car project spread.

**Why K-Car**

In 2024, Honda N-BOX achieved 206,000 unit sales in Japan, becoming the market's undisputed champion without qualifiers. Despite resembling neighborhood electric vehicles, N-BOX is a legitimate passenger vehicle, even equipped with driver assistance functions.

K-Car emerged during Japan's post-war industrial reconstruction period, originally representing an automotive industry overtaking strategy, yet remained dormant during Japan's global automotive dominance era, paradoxically flourishing in seemingly inappropriate times.

Using 1978's elimination of Japan's import vehicle tariffs as a watershed, K-Car's rapid development phases become clear.

K-Car's emergence aimed to cultivate Japan's automotive manufacturing industry. To avoid direct competition with American vehicles, Japanese authorities prioritized small vehicle development, gradually absorbing Western technology and production experience while establishing domestic automotive industry foundations.

By the 1980s, Japanese automotive production exceeded ten million units, becoming the world's largest automotive producer, with per-capita vehicle ownership rapidly increasing. Street racing culture flourished, automotive brands competed in horsepower races, and K-Car's historical mission seemed complete.

The classic anime "Initial D" featured Takumi Fujiwara driving an AE86, representing the fourth-generation Corolla Levin and Sprinter Trueno. Toyota created these sporty variants meaning "lightning" and "thunder" with affordable sports car ambitions, achieving great success.

During this period, Japanese street racing culture proliferated extensively. To handle increasing racing groups, Japanese police equipment procurement specifications escalated, even featuring Porsche 911 patrol cars. In such extravagant times, K-Car naturally lacked survival space.

However, the 1990s recession brought prolonged insufficient aggregate demand, transforming economical, compact K-Cars into consumers' primary choice, while Sprinter Trueno ceased production in 2000, remaining in historical archives.

From 1985 to 2000, K-Car sales surged from 160,000 to 1.28 million units. The "Heisei ABC" K-Car sports cars emerged as products of this era transition.

Currently sold K-Cars are generally priced between 1-2 million yen (approximately 50,000-100,000 yuan), significantly cheaper than regular vehicles. Purchasing K-Cars involves simplified procedures and lower taxes.

According to Japan's "Garage Law," purchasing regular vehicles requires parking space certification within a 2-kilometer radius of residence, while K-Cars are exempt. Additionally, Japanese tax policies heavily favor K-Cars, with automobile and weight taxes assessed at fixed rates while other vehicles face graduated tax rates.

Including environmental performance and consumption taxes, K-Cars can save several hundred thousand yen in taxes alone, representing policy support exceeding domestic green plate benefits.

Although resembling neighborhood electric vehicles in appearance and specifications, and being outperformed by BYD Dolphin in cost-effectiveness, K-Car vehicles currently account for approximately 40% of Japan's automotive market sales due to market peculiarities.

With sufficiently large markets, engineering spirit of "creating unlimited possibilities within limitations" flourishes in K-Cars, exemplified by Suzuki Jimny's rugged styling, Daihatsu TAFT's panoramic sunroof, and Honda N-BOX's driver assistance functions.

This explains why even long-term BYD supporters express concern:

BYD will directly challenge Japan's light vehicle market, long considered "sacred territory," competing with disadvantaged EVs.

K-Car may represent Japan's automotive market "vital point," but will not be BYD's endpoint in Japan.

However, in this market that self-mockingly calls itself "Galapagos-ized," any brand attempting to play the catalyst role may ultimately choose some method of accepting reality.