BYD and Chery Enter Japan's EV Microcar Market as Local Brands Accelerate Electrification

Japan’s kei car market is accelerating its shift toward electrification. This vehicle segment has long accounted for about 40% of Japan’s new car sales, and due to its compact size, low taxes, and suitability for short urban commutes, it is widely seen as naturally suited for electrification. BYD unveiled the Racco, a battery-electric kei car specifically developed for the Japanese market, at the Japan Mobility Show in October 2023, with plans to launch it in summer 2024. The Racco will be offered in three variants, with ranges of approximately 200 km and 300 km, meeting Japan’s kei car regulations. Notably, it features sliding doors—a first for electric kei cars. BYD also plans to rapidly open compact retail outlets in Japanese cities with populations under 500,000, each showcasing only one or two models, primarily promoting the Racco. Chery Automobile plans to introduce its own battery-electric kei car in Japan in spring 2025. The vehicle will be operated by EMT, a Singapore-based joint venture led by Chery and co-founded with Jiangsu Yueda Automotive Group, Guoxuan High-Tech, Japan’s Autobacs, and Anest Iwata. Developed jointly by Chinese and Japanese teams, the car will initially be produced in China, featuring core driver-assistance technologies from Chery. Its pricing will target that of the gasoline-powered Honda N-Box (priced between ¥1.74 million and ¥2.48 million). EMT aims to launch four EV models in Japan by 2029 and establish 100 integrated sales-and-service stores, expanding to hundreds of locations by fiscal year 2027. Meanwhile, Japanese automakers are also stepping up their electric kei car strategies. Honda launched the all-electric N-One e: in September 2023 and plans to introduce an electric N-Box by 2028. Nissan unveiled an updated version of its Sakura electric kei car in April 2024—the Sakura has topped Japan’s electric kei car sales charts every year since its 2022 debut. Suzuki plans to launch its first electric kei car within fiscal year 2024, while Daihatsu introduced an electric kei commercial vehicle co-developed with Toyota in February 2024. Currently, EVs account for only about 2% of Japan’s new car market, with insufficient charging infrastructure and high prices being major barriers. Analysts believe affordable, high-value electric kei cars could drive broader EV adoption. However, for Chinese automakers, building consumer trust amid the entrenched channel networks and strong brand loyalty enjoyed by domestic players like Toyota, Honda, and Suzuki remains a critical challenge.