Navigating China’s electric vehicle market: BYD’s quest for global domination faces unexpected obstacles. Discover the unique factors shaping the company’s tech-driven expansion plans.
BYD is trying to increase sales in a market that is currently a roadblock throughout the Chinese automaker’s worldwide growth by installing electric vehicle charging stations, increasing marketing, and offering consumer incentives in Japan.
China’s leading electric vehicle manufacturer is now BYD, financed by Warren Buffett, following years of rapid domestic expansion. It is currently growing abroad, notably in Japan, which has one of the biggest vehicle markets in the world.
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However, Japan continues to be difficult for foreign manufacturers to enter. The government modified the way EV subsidies are calculated this year, lowering them for BYD and some of its competitors and sparking concerns about protectionism. The demand for EVs has long been weak.
However, Japan continues to be difficult for foreign manufacturers to enter. The government modified the way EV subsidies are calculated this year, lowering them for BYD and some of its competitors and sparking concerns about protectionism. The demand for EVs has long been weak.
Higher-than-expected marketing expenses have resulted from the plan. Because of its near-identical value to that of GM and Ford combined, BYD’s international expansion is being intently observed.
However, because of worries about quality, some Japanese people are hesitant to purchase expensive Chinese goods. The two biggest economies in Asia also have a convoluted history of armed conflict and prolonged political unrest in common.
Yukihiro Obata, 58, was touring a BYD dealership in Yokohama, a Neighbour of Tokyo, with his son in July. “The cars are excellent, but I do not believe they’ll sale in Japan,” Obata remarked.
“Japanese consumers believe that Korean and Chinese manufactured goods are inferior to those made in Japan. We find it hard to think that Chinese goods might be of a greater calibre,” he remarked.
Obata stated that he was open to purchasing a car from outside the country and that EVs from Mercedes-Benz, Audi, and Hyundai were also on his radar. The Shenzhen-based company BYD has sold over 2,500 vehicles since opening its initial showroom on the Japanese mainland in February of last year.
In comparison, the most current industry data available shows that as of end-March 2023, there were approximately 17,000 Tesla’s registered in Japan, compared to just more 4,200 battery EVs delivered by Toyota Motor during the same period.
With three models available, BYD currently boasts over thirty showrooms. “We shouldn’t try to push our products on people who vehemently dislike Chinese goods in Japan,” BYD Auto Japan President Atsuki Tokufuji stated. Rather, he stated that he aimed to impress consumers with BYD’s performance and price.
Subsidies provided by the government
Industry data indicates that in the initial seven weeks of this year, 1.47 million automobiles for passengers were sold in Japan, with EVs making up just slightly over one percent of the total. The low-power “kei” tiny automobiles produced for the home market are not included in that.
In Japan, the slowdown in EV sales can be attributed to the increased focus on hybrid technology by indigenous automakers like Toyota. Redesigned in April, the government’s EV subsidy program is intended to encourage the installation of chargers and associated infrastructure.
Previously based solely on the vehicle’s performance, subsidies now consider factors like the quantity of rapid chargers a manufacturer installs and post-purchase servicing. The subsidy for BYD’s Atto 3 SUV, that retails for $30,996.00 at 4.5 million yen, was reduced from 650,000 yen to 350,000 yen, nearly half. At a company function in July, Tofukuji stated that the reduction in subsidies has hurt sales.
In response, BYD announced plans to give cashbacks on battery chargers in the months of July and August along with 0% loans from April to June. According to Tofukuji, it also intends to install quick chargers at 100 places by the end of the year, a previously undisclosed strategy that would enable it to be eligible for larger subsidies.
It began airing television ads using model and actress Masami Nagasawa of Japan in an effort to raise awareness of its brand.
That has contributed to an increase in sales, although Tofukuji declined to disclose the exact amount that the automaker has currently spent on marketing in Japan, even though it exceeded its initial budget.
The Seal sedan from BYD’s Japanese lineup is eligible for a 450,000 yen subsidy and sells for 5.28 million yen in the rear-wheel-drive version. Additionally, it offers the Dolphin, which has a price tag of 3.63 million yen as well as is eligible to receive a 350,000 yen rebate.
“Japanese Style”
According to Zhou Jincheng, director of China analysis at auto analysis company Fourin in Nagoya, the change in subsidies may be a reflection of a government initiative to protect the home industry. “They needed to take a variety of action to safeguard their automotive industry,” Zhou added.
A representative from the industry ministry stated that the goal of the modification was to foster an atmosphere that supported EV use responsibly and “in a Japanese way.” Subsidies were also slashed for Mercedes, Volkswagen, Peugeot, Volvo, Hyundai, and Subaru, a Japanese automaker.
The limit 850,000 yen was still applicable to SUVs made by Nissan and Toyota, and Tesla received subsidies on models that it sold in Japan that were on par with or greater. Foreign auto brands made up about 70% of EV sales in the first 7 months of the year, despite the low overall sales of EVs.
He stated that he preferred the automobiles’ greater cruising range over that of their Japanese competitors and had no problem purchasing from the Chinese producer. “I was employed in Shanghai once,” he stated. “I know Build Your Deeams perfectly.”
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