BYD brings price war to Japan as company works to attract buyers

Chinese EV giant struggles in Japan

BYD, the large Chinese electric car maker, is finding it very tough to sell its cars in the highly protected Japanese market. This poor welcome is the opposite of the company’s strong success and fast growth in places like Europe. Japanese drivers have a high level of loyalty to local brands.

The company has only sold a total of 5,300 vehicles in Japan since its official launch. These low sales cover the period from January 2023 to June 2025, illustrating the significant challenges foreign companies face when competing with renowned local Japanese brands such as Toyota and Honda.

BYD’s small sales versus huge local leader

BYD’s monthly sales are less than half those of Japan’s most popular electric car, indicating a clear preference among Japanese drivers for vehicles from their home companies. Local brands already offer affordable, high-quality models that are well-suited for the country’s narrow roads.

In June 2025, BYD sold a combined 512 units of its car models in Japan. In stark contrast, Nissan Motor Co.’s Sakura, a popular electric mini-car, sold a significantly higher total of 1,137 units in the same single month, confirming its strong domestic dominance.

Aggressive price cuts to attract buyers

Due to slow sales, BYD has initiated a price war in Japan by offering substantial discounts on its cars. This strategy helped them become the top EV brand in China, but it is highly unusual in the Japanese market, where stable pricing is the norm.

BYD is offering discounts of up to ¥1,000,000; when combined with available subsidies, effective transaction prices can fall by roughly 50%.

Retail price of the BYD Atto 3 crossover

BYD has introduced four different electric car models in Japan, offering customers more choices. The Atto 3 crossover was the first model released and is a crucial part of their sales strategy, targeting a popular vehicle size.

Before any discounts or subsidies, the BYD Atto 3 compact electric SUV has a starting retail price of just under ¥4.2 million in Japan. Its price is comparable to some local gasoline cars, but Japanese car buyers still remain cautious about the foreign brand’s long-term quality.

Large dealer network to build trust

BYD has committed to building a solid sales network, demonstrating its intention to remain in Japan for the long term, despite low sales. Having physical stores is crucial for establishing trust with customers who are accustomed to local brands with a long-standing history.

BYD had opened 45 locations by mid-2025 and had expanded to 64 by September, with a target of around 100 by year-end. They also announced a concrete plan to introduce a special electric ‘kei’ mini-car in the country by late 2026, aiming to compete directly in the most important small-car segment.

Strong local preference for hybrid cars

Japanese car buyers have very strong loyalty to local companies and generally choose gas-electric hybrid vehicles over pure battery EVs. This preference is due to Japan’s existing excellent hybrid technology and the lack of charging infrastructure.

Analysts expect BEVs to be about 3.4% of new-car sales in Japan in 2025, underscoring the uphill battle for pure EVs. This low market share highlights the uphill battle faced by any full EV maker, such as BYD.

Expert view on why discounts may fail

Senior auto analyst Tatsuo Yoshida from Bloomberg Intelligence is doubtful of BYD’s deep discounting. He noted that this tactic could harm the brand in Japan because it contradicts the local culture of price stability.

He warned that price-cutting risks making early buyers who paid full price feel “duped.” He added that this practice severely hurts the resale value of the car, which is an extremely important factor for most quality-conscious Japanese car owners

BYD’s global sales success is very different

The poor reception for BYD in Japan stands in stark contrast to its significant global success. The company is having surging sales across the European market as it quickly expands its reach in many other countries to maintain high growth.

BYD is increasing its export sales to reduce its dependence on the competitive Chinese market. The company aims for exports to account for 20 percent of its total global sales by 2025, representing a significant increase from the previous year.

Difficulties for foreign automakers in Japan

BYD’s struggle is a perfect example of how hard it is for any foreign automaker to succeed in Japan. Loyalty to local giants is very powerful and has prevented other famous global companies from gaining a foothold in the market.

For example, General Motors Co. completely pulled its Saturn brand out of the market years ago after seeing poor sales. Also, Hyundai Motor Co. first abandoned the Japanese market in 2009 before deciding to try and sell cars there again recently

The kei car focus against top competitors

The small, city-friendly ‘kei’ car is the most popular type of vehicle in Japan, making it the most important segment. By announcing an electric kei car for late 2026, BYD is aiming at the heart of the market’s demand.

Local rivals are also moving quickly into this EV space. Honda launched its first compact passenger EV this month, while Toyota and Suzuki Motor Corp. are working together to launch a competing small electric vehicle in the near future, creating fierce competition.

Massive stock drop due to price wars

Before the trouble in Japan, BYD was facing major financial concerns due to the price wars it had initiated in China. These concerns worried investors greatly about the company’s future profits and financial health globally.

BYD’s market value dropped by up to $45 billion in September 2025 due to concerns about a price war. This significant financial decline followed the company’s reduction of its 2025 vehicle delivery forecast, highlighting the high cost of aggressive pricing.

Berkshire Hathaway’s financial exit

Adding to the investor’s worry, BYD’s stock fell sharply in September 2025 because of another major financial event. This indicated that large, experienced investors were concerned about the company’s short-term profitability outlook.

This stock fall was partly caused by Berkshire Hathaway, an investment company run by Warren Buffett, selling its entire long-held stake in BYD. This complete exit by the major, fifteen-year investor sent a clear negative signal to the global market.

Analyst’s view on BYD’s real Japanese goal

Analyst Tatsuo Yoshida believes that BYD’s current goal in Japan is not primarily about generating revenue at this time. Instead, he argues it is about gaining a symbolic win for their global reputation and prestige as a world-class car company.

Yoshida believes BYD wants to “have a track record of doing business in Japan,” which has the world’s most “quality conscious customers.” This symbolic goal is still important for the brand “even if it’s not economically rational” in the short term.

BYD’s shift to luxury investment

In a strategic move away from its budget-friendly image, BYD is investing heavily in high-end cars. This move is intended to enhance the brand’s global perception and increase profit margins on each vehicle sold.

The company announced a $700 million investment to build a specialized race track for testing and developing luxury and performance vehicles. This change in focus indicates that they are seeking higher-profit ways to differentiate themselves from their lower-priced rivals in the domestic Chinese market.

Low sales cannot cover operating costs

The analyst commentary highlights the significant financial losses BYD is currently incurring to remain in the Japanese market. The sales volume of around 500 units per month is not sufficient to support their expenses and network.

Analyst Yoshida clearly stated that BYD’s sales of around 512 units per month are “likely insufficient to cover salaries and keep showrooms running.” This fact underlines the high cost of their current sales network and market presence in Japan.

Thinking about how BYD plans to outpace rivals? See the details in BYD doubles lineup across Europe to accelerate growth.

Building lifelong customer loyalty

The most significant long-term challenge for BYD in Japan is establishing a high level of customer trust, which local brands typically enjoy. Japanese buyers tend to remain loyal to their trusted brands for many years and multiple car purchases.

Analyst Yoshida concluded, “Selling cars is all about securing brand loyalty, about creating lifelong customers.” He believes it is “highly doubtful” whether BYD can actually achieve this kind of deep trust and loyalty in the heavily domestic Japanese market.

Want to know what’s behind the steep slide in profits? Check out BYD shares drop after sharp quarterly profit decline.

What do you think—smart move or risky gamble?

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This slideshow was made with AI assistance and human editing.