You know a car company is dead serious about world domination plans when it attacks every single market segment in the industry, including Japan's quirky kei car sector.

We're talking about China's largest carmaker, BYD, which has just launched Japan's first-ever non-Japanese kei car. It's called the BYD Racco and it's the company's first passenger vehicle developed specifically for a single overseas market.

It's obviously all-electric and it starts at 2.15 million Japanese yen, which is the equivalent of about $13,000. That makes it approximately $2,000 cheaper than other electric kei cars, such as the Nissan Sakura and Mitsubishi eK X EV (which share the same platform). Another popular model, the N-One e: from Honda, costs some $3,500 more than the BYD Racco.

However, most Japanese rivals receive generous subsidies from the government, while BYD gets the lowest one in the segment—150,000 yen versus 580,000 yen for Honda, Mitsubishi, and Nissan.

BYD's kei car is more expensive than Toyota's C+ pod, which starts at around $11,000, although to be fair, the two-seat C+ pod is almost a full meter shorter than the kei car category's upper limit of 3.4 meters (133.8 inches). Toyota currently does not offer a direct rival for the BYD Racco.

The BYD Racco does offer a longer driving range than all of its rivals, though: up to 199 miles from a 35.84-kWh lithium iron phosphate (LFP) battery. Only the Honda N-One e: comes close with 183 miles.

The Racco also comes with standard advanced driver-assistance systems across all grades, sliding rear doors, and a tall interior (the vehicle is 70.8 inches high). BYD also claims the Racco is the segment's first software-defined (SDV) kei vehicle.

"We want to deliver unprecedented convenience and enjoyment to all people across Japan through our technology," BYD Japan president Liu Xueliang said at a launch event in Tokyo, according to The Straits Times. The automaker targets small cities and towns under 500,000 people, with 77 sales locations currently in place.

Affordable and ideal for Japan's narrow roads due to their small footprint, kei cars make up some 40 percent of the country's new vehicle sales. Suddenly BYD's move makes sense, doesn't it? Especially since the Chinese giant aims to overtake Toyota as the world's largest carmaker by 2030.

Obviously, the BYD Racco won't be enough to achieve that ambitious objective, but it's an interesting step in that direction. For starters, BYD targets annual sales of 10,000 Rocco EVs in a market segment that has historically been dominated by local OEMs like Honda, Suzuki, Nissan, and Toyota.

At the same time, BYD is expanding aggressively in Europe, South America and other markets around the world. Last year, BYD, which stands for "Build Your Dreams," overtook Tesla as the world's biggest seller of pure electric vehicles. 

This story was originally published by Autoblog on Aug 1, 2026, where it first appeared in the News section. Add Autoblog as a Preferred Source by clicking here.