Japan's long-dormant electric car market stirs as Toyota overtakes Nissan and BYD closes in
Toyota became Japan's best-selling electric vehicle brand for the first time in the December quarter of 2025, ending Nissan's near-15-year lead, as new models, government subsidies and rising fuel prices nudge the country's stalled EV market toward life.
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Nissan's 15-year EV lead ends
Nissan had held the top spot in Japan's domestic electric vehicle market for close to 15 years, a position built almost entirely on the Leaf. That grip loosened in the fourth quarter of 2025, when Toyota sold more battery electric vehicles in Japan than Nissan for the first time, according to Japan Automobile Manufacturers Association figures reported by Carscoops and carried by Taiwan's udn.com motoring section. The shift was driven by cooling interest in Nissan's electric models alongside rising demand for rivals' newer products. 41
The JAMA data show Toyota sold 3,684 electric vehicles in Japan in the December quarter, a surge attributed largely to the bZ4X, launched locally in October. Although modest by global standards, that represented thirteenfold growth compared with the same quarter of 2024. Nissan's EV sales fell 56 per cent to 2,857 units over the same period, with demand weakening for both the Leaf and the Sakura kei-class electric minivehicle in the final months of the year. 4
Honda and Tesla close behind
The change in leadership extended beyond Toyota. Nikkei Asia reported, in coverage cited by udn.com, that Honda sold 2,732 electric vehicles in the quarter, aided by the launch of the N-One e:, an electric kei car with a range of up to 295 kilometres on a single charge, the longest of any electric kei model on the market. That was enough to push Honda past Tesla, whose quarterly sales nonetheless rose 62 per cent year on year to 2,600 units. 4
BYD also grew rapidly from a small base, with fourth-quarter Japanese sales up 72 per cent to 832 units. The Chinese manufacturer plans to launch the Racco, an electric kei-class minivehicle and its first model designed exclusively for the Japanese market, this year. Renewable Matter reported the Racco is taller than standard minicars to offer more interior space, with an indicative price of around 2 million yen, undercutting many conventional electric models from Japanese makers. 45
A small market showing signs of movement
Even with the reshuffle at the top, electric vehicles account for just 1.9 per cent of all new car sales in Japan, the lowest share of any advanced economy, according to figures carried in the udn.com report. Nissan has several new models scheduled for 2026 that may help lift that number, and the government is acting to accelerate the transition: eligible buyers this year can receive subsidies of up to 1.3 million yen. 4
Toyota's own annual report for 2025 recorded a 168.4 per cent increase in global battery electric vehicle sales to 145,000 units, Renewable Matter reported from Nagoya. That momentum appeared to continue into 2026, with close to 80,000 vehicles sold in the first three months of the year, a rise the publication linked to higher petrol prices. The same report noted the Toyota Commemorative Museum of Industry and Technology in Nagoya still displays no modern electric vehicles, only a 1967 Toyota 2000GT converted to electric power, underscoring how recently the company's emphasis rested on hybrids and hydrogen fuel cells. 5
Japanese makers' shifting strategies
Nissan is preparing a cheaper version of the Sakura, the electric minivehicle introduced in 2022 and popular in Japan. Renewable Matter reported the new variant will cost 150,000 yen less than the original, at 1,868,600 yen. Honda, having launched the N-One e: in the northern autumn, is preparing the Super-One, a compact electric car based on that model. 5
Not every Japanese manufacturer is moving in the same direction. Renewable Matter reported that Mazda cut its planned EV investment by 20 per cent to 1,200 billion yen through 2030, announcing the reduction on 13 May, and revised its EV sales forecast down to about 15 per cent of global sales by 2030 from an earlier 25 per cent target. Mazda has delayed an in-house electric model originally planned for 2027 to 2029 or later, and will instead serve EV demand with four models developed with Chinese partner Changan Automobile for Europe, Australia and other markets, including the Mazda6e already on sale. 5
The Australian mirror
The pressure on Japanese makers is visible in Australia, a market the ABC's chief business correspondent Ian Verrender described as a litmus test for global consumer taste given the absence of local manufacturing and trade barriers. In the first half of 2026, sales fell for every major Japanese manufacturer except Honda, with Mazda down 17 per cent, Toyota down 21 per cent, Subaru and Mitsubishi each down 25 per cent and Nissan down 32 per cent, while BYD's sales jumped 124 per cent, the ABC reported. 3
The ABC also reported that a single shipment of 5,000 BYD electric vehicles arrived in Melbourne aboard the carrier Zhengzhou on 2 June, the largest-ever single EV shipment to Australia, and that BYD is closing the sales gap with Toyota, which has led the Australian market for 23 consecutive years. Separately, CafeF, reporting on Nikkei Asia's coverage, noted the Federal Chamber of Automotive Industries recorded electric vehicles at 21.7 per cent of new vehicle sales as of July, and that Toyota vice-chairman Koji Sato told an annual supplier meeting in March: "Unless things change, we will not survive." 32
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