China’s largest electric vehicle maker BYD plans to introduce plug-in hybrid electric vehicles (PHEVs) in Japan starting in January 2026, according to Nikkei China. The company is expected to launch the BYD Sealion 6 (known as Song Plus in China) SUV as its first PHEV model for the market, with further details set to be announced at the Japan Mobility Show in Tokyo in October 2025.
BYD Japan President Atsuki Tofukuji said that the introduction of PHEVs will help address range concerns often associated with BEVs. He described the move as an essential step in expanding BYD’s presence in Japan.
PHEVs combine rechargeable batteries with an internal combustion engine. They offer EV-like driving at lower speeds but rely on the engine for longer distances, reducing range anxiety. Unlike conventional hybrids, PHEVs can be charged externally and may serve as backup power during emergencies or outdoor use. However, their higher costs compared to traditional hybrid vehicles have limited adoption in Japan.
Competition in Japan’s PHEV market remains strong, with Toyota and Mitsubishi holding significant shares. Models such as the Toyota Harrier and Mitsubishi Outlander PHEV dominate the segment. While the Sealion 6 is considered less competitive in driving range and fuel efficiency compared with domestic rivals, BYD aims to position it at a lower price point. Japanese PHEVs typically cost more than five million yen (approx. 24,130 USD), while BYD intends to offer its model below this threshold.
Globally, PHEVs account for a larger share of BYD’s sales than BEVs. In 2024, BYD sold 4.27 million vehicles, with PHEVs making up 2.48 million units (58 per cent), compared with 1.76 million BEVs (41 per cent). The company has introduced PHEVs in Europe and Southeast Asia, including markets such as Thailand, the Philippines, and Singapore.
PHEVs represented 7.6 per cent of global new car sales in the first half of 2025, nearly equal to conventional hybrid vehicles at 7.7 per cent. In China, PHEVs hold a 15.9 per cent market share, surpassing conventional hybrid vehicles at 3 per cent. In contrast, Japan remains heavily skewed toward traditional hybrid cars, which account for nearly 30 per cent of sales, compared with just 1 per cent for PHEVs.
The International Energy Agency (IEA) projects that by 2030, PHEVs will represent about 9 per cent of Japan’s passenger vehicle market, close to EVs at 10.6 per cent. The agency also notes regional differences in environmental policies, with some markets supporting PHEV adoption through subsidies while others exclude them.
BYD has indicated that multiple PHEV models will follow the BYD Sealion 6 in Japan as it seeks to expand its PHEV lineup globally.
In another news BYD Co., China’s largest automaker, has spent the past five years accelerating at a remarkable pace. By 2024, leveraging government support, aggressive pricing strategies, and overseas expansion, the company overtook Tesla Inc. to become the world’s top seller of electric vehicles (EVs). Its rapid rise made it a symbol of China’s ambitions in the global EV market. However, the momentum that propelled BYD to the top has recently encountered significant challenges, revealing vulnerabilities in both domestic and international markets.
A Reality Check for China’s EV Leader
What was anticipated to be another blockbuster year for BYD has turned into one of the toughest periods since 2020. After half a decade of uninterrupted growth, the company’s sales momentum has stalled. Between May and August 2025, cumulative deliveries in China fell 10% year-on-year. Seasonal market fluctuations contributed to the slowdown, but intensifying competition from domestic rivals such as Geely Automobile Holdings Ltd., Zhejiang Leapmotor Technology Co., and Xiaomi Corp. has also eaten into BYD’s market share.
The impact of the slowdown became particularly evident in August 2025 when BYD reported its first quarterly decline in profit in three years. Net income fell by 30%, a drop that sent shares tumbling by 8%, wiping more than $6 billion off its market value. Originally, BYD had targeted sales of 5.5 million vehicles in 2025, but the company now expects to sell closer to 4.6 million — though this revised figure has yet to be confirmed officially.
Outside of China, BYD has fared better. Its aggressive global push, offering high-performing and affordable EVs, has helped the company attract new customers in foreign markets. Higher-margin sales abroad have offset some of the losses at home. Yet, as BYD expands rapidly, regulators in several countries, from Europe to Mexico, are beginning to impose restrictions on the influx of cheaper Chinese EV brands, reflecting growing concerns about the market impact of such aggressive pricing strategies.
Factors Behind BYD’s Troubles
BYD’s challenges stem from both market dynamics and regulatory interventions. In China, government authorities have increasingly scrutinized the domestic EV price war that began in early 2023. Restrictions on price discounting have removed a key lever BYD previously relied on to attract buyers. The company’s vertically integrated supply chain — producing most of its own batteries and chips — has helped it sidestep many global supply chain issues. However, regulatory clampdowns on supply-chain financing have forced BYD to adjust longstanding practices, including its strategy of delaying payments to suppliers. New rules now require carmakers to settle supplier invoices within 60 days, a dramatic shift from BYD’s average payment cycle of 275 days in 2023.
As a result, BYD has had to scale back its aggressive domestic pricing and seek alternative ways to maintain sales momentum. One approach has been the development of new, technology-rich models aimed at consumers looking for greater value beyond mere discounts. Analysts remain cautiously optimistic, noting that BYD’s 2026 lineup could offer a significant boost. HSBC Holdings Plc analyst Yuqian Ding suggested that the introduction of major tech upgrades could accelerate growth next year, potentially reversing the current slump.
Investor Sentiment
Investor confidence in BYD has wavered. The company’s market capitalization peaked at $175 billion in late May 2025, only to fall sharply due to regulatory curbs and slowing domestic sales. The loss of aggressive discounting as a tool to drive volume has particularly concerned investors, who have long relied on BYD’s ability to undercut competitors while maintaining high-quality production. Despite this, BYD’s stock performance remains stronger than that of Tesla in some respects, as U.S. EV maker shares have been weighed down by broader controversies, including CEO Elon Musk’s political involvement, which has alienated some customers.
Competitive Landscape
While BYD remains the leader in sales, other domestic EV makers have been gaining ground. Leapmotor, Geely, and Xiaomi are experiencing rapid growth, albeit from a lower base. BYD’s Hong Kong-listed shares have underperformed most domestic peers since March, highlighting the impact of the recent slowdown. The rising competitiveness of these brands, combined with regulatory limits on discounting, signals a more challenging market environment for BYD in the coming years.
From Batteries to Electric Vehicles
BYD’s journey to prominence is rooted in its origins as a battery manufacturer. Founded in 1995, the company initially focused on batteries for mobile phones before entering the automotive sector in 2003 through the acquisition of a struggling state-owned automaker. A turning point came in 2016, when BYD began hiring top international talent, including Wolfgang Egger, a former design chief at Audi and Lamborghini. Egger transformed BYD’s vehicle design, introducing stylish, modern models that cost roughly 25% less than comparable Western cars.
This design overhaul, combined with government incentives for new-energy vehicles, positioned BYD to capture a rapidly growing domestic market. Subsidies and policy support fueled EV adoption, helping BYD grow its finances and expand its product lineup. Today, the company offers vehicles across a wide price spectrum, from a city hatchback priced at approximately 55,800 yuan ($7,800) to an electric sports car costing up to 1.7 million yuan, catering to both mass-market and premium segments.
Looking Ahead
Despite its current struggles, BYD’s global ambitions remain intact. While the domestic market faces headwinds from regulatory oversight and fierce competition, overseas sales have demonstrated the brand’s potential to grow outside China. The company’s strategy of producing affordable, high-performance EVs combined with technological innovation could help sustain its position as a global leader in electric vehicles.
The next phase for BYD will hinge on balancing domestic regulatory compliance with continued international expansion, while introducing models that appeal to tech-savvy consumers. Analysts believe that with the right mix of innovation and market strategy, BYD could recover its growth trajectory in 2026, potentially offsetting the setbacks experienced in 2025. For now, the company faces a pivotal period that will test its ability to navigate regulatory, competitive, and market challenges while maintaining its leadership in the rapidly evolving EV industry.