Chinese carmaker BYD lost out on Japan’s latest revision of electric vehicle purchase subsidies. None of its four models sold in Japan was granted a subsidy increase while those by Toyota Motor, Tesla, and others saw hefty hikes.
This means consumers buying BYD EVs would get up to JPY 950,000 (USD 5,983.6) less in assistance than if they were to buy one made by Toyota.
The Ministry of Economy, Trade and Industry (METI) changed the upper limits of the subsidies to purchase clean energy vehicles. The maximum subsidy for EVs was increased by JPY 400,000 (USD 2,519.4) to JPY 1.3 million (USD 8,188), while that for fuel cell vehicles (FCVs) was reduced by JPY 1.05 million (USD 6,613.4) to JPY 1.5 million (USD 9,447.7).
Even though the ceiling for the EV subsidy was raised, multiple carmakers did not see any increase in the funds provided for purchases of their vehicles. BYD was hit particularly hard: the subsidies available for all of its models remained between JPY 350,000–450,000 (USD 2,204.5–2,834.3), the same as before the change to the upper limit.
“We’re at an overwhelming disadvantage,” said Atsuki Tofukuji, the head of BYD’s Japan unit. “The gap [with companies like Toyota Motor] has grown to up to nearly JPY 1 million (USD 6,298.5). We can’t compete with JPY 350,000 (USD 2,204.5).”
METI said it made decisions based on documents submitted in 2025. The revised amount for EVs went into effect in January, while that for fuel cell vehicles will apply from April onward.
The latest change was made in light of an agreement reached in the US-Japan tariff negotiations, its aim is to ensure fair competitive conditions, a METI official said.
“The US pointed out that the gap between the upper limit for EVs and that for FCVs was too large,” the official said.
There are two main criteria in determining the subsidy: a vehicle evaluation of up to 100 points, which looks at factors such as performance, and a company evaluation of up to 100 points, which looks at things like the availability of charging infrastructure and training of maintenance personnel. The total score, out of 200 points, determines the subsidy amount.
“Our company evaluation is low,” Tofukuji said, expressing his disappointment. “Or rather, we’re not being evaluated at all.”
BYD has been installing fast chargers at dealerships nationwide, which is one of the items assessed in the company evaluation. But the company still received a zero score for “development of charging infrastructure.”
“Even manufacturers that are not actively their own fast chargers were able to get some points,” Tofukuji said.
Tofukuji asked METI to explain BYD’s low score, the ministry replied that it “could not reveal that” and that officials were “too busy to address it.”
“If the reason is just because we’re a Chinese manufacturer, then I want them to say so,” he said.
The subsidy program will apply for the three-month period of January through March, and a new framework is expected to be introduced for fiscal 2026, which begins in April. If the subsidy for BYD vehicles remains unchanged at JPY 350,000, the company will have a difficult time competing with manufacturers that receive larger ones.
Meanwhile, automakers that received larger subsidies after the change are gaining momentum. Tesla’s increased by JPY 400,000 to JPY 1.27 million (USD 7,999.1), which is close to the upper limit. Last year, the company’s annual new car sales in Japan exceeded 10,000 units for the first time. Further growth is expected thanks to the subsidy’s support.
“As expected, the American players got favorable treatment,” said a person affiliated with imported vehicles. “We didn’t have high expectations.”
Among European makers such as BMW, Volkswagen, and Volvo Car, many saw little or no change in the subsidies for their vehicles.
One that did get a change was German brand Audi, which saw increases in subsidies for multiple models. The upper limit for its cars was raised by JPY 320,000 (USD 2,015.5) to just over JPY 1 million (USD 6,298.5). “We’re one of the few European companies to receive an increase,” said Matthias Scheper, brand director for Audi’s Japan unit.
The company has been actively investing in infrastructure in anticipation of wider EV adoption in Japan, installing not only fast chargers across the country but also providing standard chargers free to hotels and other facilities.
Asked about the fact that many Japanese makers received greater subsidies, Scheper said, “We welcome companies such as Toyota working hard at EVs. That will help energize the domestic EV market.”
South Korea’s Hyundai Motor saw subsidies for some of its models increase. The company’s sport utility vehicle, the Ioniq 5 Voyage, received a JPY 200,000 (USD 1,259.7) increase, bringing it to JPY 870,000 (USD 5,479.7). “We received a significant increase,” said Toshiyuki Shimegi, the head of Hyundai Mobility Japan. “[The government] recognized our steady effort and various initiatives.”
“We increased the subsidy amounts for models that receive high overall evaluations for achieving GX [green transformation],” a representative from METI said when asked about the significant disparities among manufacturers. “As a result, the amounts rose for some models.”
Asked about complaints from automakers that the evaluation criteria were opaque, the representative said, “We respond seriously to all inquiries.”
Yoshiaki Kawano, an analyst at S&P Global Mobility who specializes in the Japanese automotive market, said that although the evaluation criteria did not change, inconsistencies are emerging in the amounts depending on the maker.
“The change came after the US-Japan tariff negotiations, so it can’t be ruled out that some aspects could be perceived as favorable treatment from the government,” Kawano said.
EVs account for only about 2% of new car sales in Japan. The EV subsidies are one of the major factors influencing consumer purchasing decisions, and increases in the subsidy translate directly into higher sales.
More EV models will become available on the Japanese market this year, and subsidies are expected to help raise EVs’ share of overall sales. Persuading companies to promote EV sales in the country will require a more convincing subsidy framework.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.
Note: JPY figures are converted to USD at rates of JPY 158.77 = USD 1 based on estimates as of March 25, 2026, unless otherwise stated. USD conversions are presented for ease of reference and may not fully match prevailing exchange rates.