The subsidy wall: the rules are not written for you

Japan's EV subsidy rules are public, and they were written around the companies already here. Take two kei EVs with similar range and a similar price. One gets 580,000 yen knocked off by the national subsidy. The other gets 150,000. The 430,000 yen difference is about a fifth of the sticker price. Anyone can read the rules. Newcomers just don't score well on them.

This post is about a kind of competitor I call access control on a market map. It doesn't sell cars. It decides what your car is worth.

How the subsidy is calculated

Japan's CEV subsidy is set by the Ministry of Economy, Trade and Industry. For fiscal 2026 the cap for a kei EV is 550,000 yen plus up to 30,000 in add-ons, 580,000 in total. But each model's amount is scored in two parts. One is the vehicle itself: efficiency, range, lifecycle CO2. The other is what the maker does in Japan. That means contributing to public fast chargers, building charging infrastructure in proportion to its own sales, supply stability, a cybersecurity system, a maintenance network and technician training, disaster-cooperation agreements with local governments, and use of low-carbon steel. For 2026 the weight on charging and supply stability went up.

The Nissan Sakura scores full marks: 580,000. The Racco gets 150,000. BYD's other two models, the Dolphin and ATTO 3, dropped from about 650,000 in fiscal 2025 to about 350,000 in 2026. Every item on the sheet is something Japanese makers have built over decades. A nationwide dealer network is the maintenance system. Partnerships with utilities are the charging infrastructure. Relationships with prefectures are the disaster agreements. A newcomer scores near zero on these without anyone needing to target it.

Unfair? It belongs on the map.

Companies entering Japan usually put two kinds of competitors on their market map: those who compete for customers and those who compete for people. Picking the wrong competitors argued there is a third kind, the ones who control access. Subsidy rules are that kind. They don't compete with you. They set your price. Misread them and your price list is wrong from day one.

BYD responded in two ways. One was price. The entry Racco sits at 2,145,000 yen, or 1,995,000 after the 150,000 subsidy, so BYD absorbed part of the gap in the sticker and the number the customer sees lands near the Sakura's. The other was a lease: zero down, about 19,000 yen a month, with the subsidy spread across the payments. Both work around the rule. Neither changes it.

BYD is walking the slower road too. Its partnership with Meiji Sangyo began with technician training, which is literally the "technician development" line on the scoring sheet. Growing the dealer network from 51 points to 77 is the "maintenance system" line. Those points won't come back within a year. The direction is right, though. You can't change the rules. You can slowly turn into the kind of company the rules assume.

Before entering Japan

Find every scoring sheet. Subsidies are only the start. There are public-procurement evaluations, industry-association certifications, insurers' rate tables, prefectural incentives. Behind each one is a definition of contribution, and each definition is shaped around the incumbents. List them, work out what you will actually score in year one, and only then set prices.

Turn the scoring items into an investment plan. Chargers, technicians, disaster agreements: you can buy or build each of them, and each is cheaper than a price cut. A price cut is paid on every car. A maintenance network is paid once.

Put the gap in the budget. Hoping it closes is no plan. One reason first-year budgets run over by half is exactly this: pricing assumes the same subsidy as the incumbent, and year two turns up a quarter of it.

The rules are public. Nobody hides them. Before you arrive, though, nobody reads them for you either.