Japanese Automakers Accelerate Adoption of Chinese Parts to Counter Price Competition

Toyota and Nissan are significantly increasing the proportion of locally sourced components in their battery electric vehicles (BEVs) sold in China to counter pricing pressure from Chinese automakers. This shift is disrupting the traditional "keiretsu"-style supply chain, long dominated by Japanese suppliers, causing several Japanese parts makers to lose orders consecutively. Chinese component suppliers now offer costs 30% to 40% lower than their Japanese counterparts and can move from order placement to mass production in just about 10 months—significantly faster than the more than 18 months typically required by Japanese firms. In terms of quality, the gap has virtually disappeared; Yasuhiro Yasuda, Executive Vice President of Toyota Boshoku, publicly stated, “There is no longer any difference.” Take Toyota as an example: its BEV model bZ3X, launched in China in March 2025, primarily uses components from Chinese suppliers, with a localization rate approaching 90%. For subsequent models—the bZ5 and the bZ7, scheduled to open for reservations in March 2026—the share of Japanese-sourced parts rises to around 30%, but Chinese components still dominate overall. Similarly, Nissan’s Dongfeng Nissan-developed all-electric sedan, the N7, has also substantially increased its use of Chinese-made parts. In 2022, the price gaps between BYD’s BEVs and those of Toyota and Nissan in the Chinese market stood at approximately ¥2 million and ¥3 million yen, respectively. With the launch of the bZ and N series models, these gaps had narrowed to roughly ¥200,000 by 2025, allowing Japanese automakers to maintain basic competitiveness.