Chinese EV Makers Accelerate Entry into Japan as Imported BEV Sales Rise for Seventh Straight Year

Japan's automotive market has long been dominated by domestic brands such as Toyota, Honda, and Suzuki, with foreign automakers holding less than 10% market share. The exits of Opel in 2006, Hyundai in 2009, and Ford in 2016 underscored the challenges foreign brands face entering this market. However, the shift toward electrification is now reshaping the competitive landscape. According to data from the Japan Automobile Importers Association (JAIA), fiscal year 2025 saw imported vehicle sales (excluding Japanese brands) rise 3% year-on-year to 238,081 units—the first increase in seven years. Notably, imports of battery electric vehicles (BEVs) surged 34% to 33,299 units, accounting for 14% of total imported vehicle sales, up three percentage points from the previous year, marking the seventh consecutive year of growth. Chinese automakers are accelerating their expansion into Japan. BYD’s sales in Japan reached 4,536 units in FY2025, doubling year-on-year, while Tesla—categorized under “Others”—sold 13,700 units. Additionally, Chery is reportedly planning to establish a joint venture with Japan’s Autobacs Seven to begin selling EVs in Japan from 2027. Autobacs Seven confirmed that discussions are still at an exploratory stage. Domestic adoption of new energy vehicles (NEVs) in Japan remains low. As of September 2025, the national NEV penetration rate stood at just 2.8%, with pure electric models accounting for only 1.7%. Imported EVs have thus played a key role in market education. JAIA data shows that by end-June 2025, the number of imported EV brands and models had grown from 10 brands and 20 models in 2020 to 22 brands and 173 models. Government policy is also providing support. Starting January 1, 2026, Japan will raise the maximum subsidy for EV purchases from ¥900,000 to ¥1.3 million. Notably, Honda announced plans to launch a limited run of 3,000 units of its all-electric SUV Insight—produced in China—in the Japanese market, becoming the first Japanese automaker to reverse-import EVs made in China. Chinese EV makers are emphasizing localization in their Japan strategies. At the 2025 Tokyo Motor Show, BYD unveiled the BYD RACCO, a K-EV model specifically developed for Japan, alongside the plug-in hybrid Sealion 06 DM-i, targeting the kei-car segment, which accounts for roughly 40% of Japan’s auto market. On the distribution front, BYD aims to build a network of 100 dealerships; as of the announcement, it had already established 69 outlets and was considering adding smaller stores in regional cities. If Chery’s partnership with Autobacs Seven materializes, it would leverage Autobacs’ network of approximately 1,200 stores and its in-house development and sales company, EMT, to advance localized operations. EMT has already recruited engineers from Honda, Mazda, and other Japanese automakers to lead vehicle development tailored for the Japanese market. Overall, Chinese EV manufacturers have moved beyond initial market trials and are now pursuing systematic, deep-rooted strategies in Japan.