Chinese EVs win over some in South Korea, but Japan is proving to be a rougher road

Kim Min-seon bought an electric vehicle from China's BYD in July, but her purchase quickly raised questions.

"Everyone reacted like, 'Why did you buy a Chinese car? Are you trying to get yourself killed?'" said the 48-year-old Seoul resident. Her decision would have been unthinkable just a few years ago in South Korea, where Chinese cars were widely dismissed as shoddy.

At around $18,500, the Dolphin compact was inexpensive, well equipped and - crucially - available. Kim initially wanted a Hyundai Casper EV but was told she would have to wait more than two years for delivery.


After rapid expansion in Europe and elsewhere, BYD and other Chinese automakers are now targeting South Korea and Japan, two countries with entrenched car industries - and no shortage of sceptical consumers. They are making inroads in South Korea, but Japanese sales have been muted.

The difference is partly due to EV uptake. Roughly a quarter of the new cars sold in South Korea this year were EVs, versus 3% in Japan, according to industry data.

Chinese automakers have proven their ability to spend years building dealer networks and adapting cars to local tastes, according to industry executives and analysts.

It is a strategy born of both confidence and necessity: China produces some of the most technologically advanced cars available anywhere at prices rivals struggle to match. But its domestic market is so saturated with brands that carmakers need to look overseas for growth and profit.

"They enter first, watch what happens and gradually adjust their strategy," said Liao Jingnan, founder of MobyInfo, a Tokyo-based consultancy.

Reuters interviewed more than a dozen people including company executives, dealers and EV buyers in both South Korea and Japan for this article.

South Korea breakthrough

BYD sold more than 20,000 vehicles in South Korea in the first nine months of this year, overtaking the combined sales of Toyota and its Lexus brand, according to market research firm Carisyou.

BYD has been able to take advantage of South Korea's growing appetite for cheap EVs, said Lee Jae-il, a senior analyst at Eugene Investment & Securities. Petrol prices have surged almost 10% since the US-Israeli war on Iran started, but Hyundai and Kia focus mainly on premium EVs, offering only a few for under $30,000.

"The timing has worked particularly well for BYD," Lee said.

Geely's Zeekr brand began taking orders for its 7X SUV in South Korea in June and plans to open up to 14 showrooms by the end of the year. Chery is expected to enter the market in 2027, according to an industry presentation reviewed by Reuters. Chery declined to comment.

Xpeng, which set up a local unit in Korea last year, is now looking to hire someone to build out its retail network, according to a job posting on LinkedIn. Xpeng declined to comment.

South Korean carmakers are worried. Jeong Dae-jin, the chairman of the Korea Automobile & Mobility Association, has called for tax incentives for Korean-made EVs.

Automakers were "very desperate," he said.

Japan proves tougher

Japan may end up testing the patience of Chinese automakers. Foreign brands account for only about 6% of passenger car sales and drivers prefer hybrids, the technology championed by Toyota.

Relations between Tokyo and Beijing have been fraught since last year under right-wing Prime Minister Sanae Takaichi, who has taken a harder line on China.

Some 88% of Japanese and 71% of South Koreans have an unfavourable view of China, according to a Pew Research Center survey this year. Diplomatic strains have had no particular impact on BYD's sales, showroom visits or customer inquiries in Japan, a spokesperson for BYD Auto Japan said.

BYD, which started selling cars in Japan in 2023, has more than 75 dealerships and plans to eventually expand to 100. It sold fewer than 4,000 cars in Japan in the first nine months of the year, just a 0.1% market share.

In July, it launched a boxy EV in Japan's "kei" minicar segment, which is dominated by domestic firms. As of September, it had only sold about 650 of them, although BYD's overall Japanese sales have risen every year.

"It's not the market share," said Marc Yamada of consulting firm Alvarez & Marsal. "It's the growth."

EMT, a startup backed by Chery, plans to launch a kei car in the first half of 2027 and three more models by 2029, Chief Technology Officer Koji Yamamoto told Reuters. It aims to build cars locally by the 2030s, he said.

Zeekr plans to launch a luxury van in Japan, initially targeting taxi fleets and chauffeur services, said Hiroyasu Koma, CEO of folofly, Zeekr's distributor.

One person who will not be buying a Chinese car anytime soon is Fumio Kuwabara, an early adopter who has been driving Japanese EVs since 2010. He does not trust the reliability of Chinese cars, he said.

"I feel like they've cut corners in places you can't see," he said.

Ruling party lawmaker Daishiro Yamagiwa told Reuters that Japan must consider the security risks from Chinese cars that can be controlled from outside the vehicle.

It is still unclear whether Japanese consumers will hold out or end up overcoming their wariness as South Korean Lee Seong-dong did.

"Honestly, I didn't have a good image of Chinese cars, either," said Lee, a content creator in Seoul, who bought a Dolphin.

"Seeing the car in person and driving it changed my thinking a lot," he said.