TOKYO: China's BYD launched an electric mini-car in Japan on Tuesday, hoping the Racco model will revive sales in a market where it has struggled to gain traction since entering the passenger-car segment in 2023.

The Shenzhen-based automaker ‌said buyers ⁠could ⁠get the entry-level Racco for less than 2 million yen ($12,213) after taxes and ​government subsidies, a threshold some analysts have said will be key for attracting ​Japanese drivers.

The model's suggested retail price starts at 1.95 million yen before taxes and subsidies, undercutting Nissan's Sakura, Japan's best-selling electric ​mini-car. But because the Racco is eligible ⁠for a ‌smaller government incentive, the Sakura remains cheaper for ​buyers after ​subsidies are applied. "BYD is probably not looking ⁠to make a lot of money from the Racco," ​Hiroki Ihara, an analyst at Tachibana Securities, ​said prior to the launch. "More likely, it wants to boost brand awareness by adding a 'kei' car to its lineup."

Kei cars translates as "light vehicle", a segment that makes up about a third of Japan's auto sales and has traditionally been served almost ‌entirely by local automakers such as Honda and Suzuki. BYD is targeting 10,000 orders for the Racco by the end of 2026 as it ⁠seeks to gain a stronger foothold in the market. At the end of 2025, it had sold just over 7,400 vehicles in Japan since its launch in 2023.

The launch highlights the growing challenge Chinese automakers pose to Japanese rivals, which have been losing ground to BYD and other domestic EV makers in China, the world's largest auto market.