Chinese automaker BYD is evaluating the possibility of bringing its new Racco kei car to Europe, contingent on upcoming EU regulations designed to support affordable small electric vehicles. The Racco, unveiled at the Tokyo Motor Show, represents BYD’s push into Japan’s highly competitive microcar market, traditionally dominated by Japanese brands like Honda, Suzuki, and Toyota.
Kei Car Specifications and Market Context
The Racco is engineered to comply with Japan’s kei car standards, resulting in compact dimensions: 3.4 meters long, 1.475 meters wide, and 1.8 meters tall. It features a boxy design similar to its Japanese competitors, but marks the first significant entry by a foreign automaker into this segment.
The vehicle is powered by a 20 kWh battery, offering an estimated range of 112 miles, with DC fast charging capabilities up to 100 kW. The electric motor’s power output hasn’t been disclosed yet.
BYD’s Japan Strategy and Global Ambitions
Japan’s kei car market accounts for nearly one-third of all car sales in the country. BYD has struggled to gain traction there, selling fewer than 7,000 vehicles since 2022 compared to 11,000 in the UK alone during a single month in late 2025.
Company VP Stella Li suggests the Racco could become a global entry-level model if the EU creates a regulatory space for such compact EVs. Currently, the EU is considering establishing an “E-car” category to promote affordable small cars, as proposed by European Commission President Ursula von der Leyen.
EU Regulation as a Key Factor
If the EU’s new regulations materialize, BYD could capitalize on the opportunity to expand the Racco ’s availability beyond Japan. This would depend on whether the EU framework provides sufficient viability for small, affordable EVs.
The Racco represents a potential turning point for BYD, which could leverage its entry into Japan’s kei market as a stepping stone for broader global expansion. The success of this strategy will hinge on the EU’s regulatory decisions in the coming months.
