TOKYO -- Suzuki Motor is making a major bet to defend its home market from Chinese electric-vehicle rivals with the launch of the cheapest Japanese EV yet. But its new minicar also exposes a broader vulnerability facing Japan's automakers -- their dependence on Chinese batteries.

Suzuki unveiled its first kei passenger EV, the e-Sky, on Tuesday, priced at 2.12 million yen ($13,400), slightly cheaper than a rival model -- BYD's Racco electric minicar that the Chinese automaker began selling in Japan in July.

Kei minicars, a vehicle category unique to Japan and which are popular due in part to their low ownership costs, account for about 40% of new-car sales in the country. The small and lightweight auto is known for its fuel efficiency and ease of driving on narrow roads.

Its driving range is 310 kilometers, short of the 320 km offered by BYD's Racco, but the e-Sky is the most energy-efficient mini EV at around 12 km per kilowatt-hour. Suzuki developed its own version of the e-axle drive system in-house for the first time, as well as a new vehicle platform just for kei EVs.

But there is a catch. Its battery, a core component that accounts for a significant share of an EV's cost, is made by a BYD affiliate.

There was little mention of the Chinese battery supplier during a news conference in Tokyo for the unveiling. When asked about the Chinese manufacturer's Japanese market entry with its kei offering, Suzuki President Toshihiro Suzuki said, "It would be easy to retreat when Chinese and other foreign manufacturers enter the market, but we need to find a way to survive and compete." The decision highlights what experts describe as one of the weakest links in Japan's efforts to compete with Chinese rivals -- batteries.

Sanshiro Fukao of the Itochu Research Institute, a Tokyo-based think-tank, said Chinese manufacturers were "three or four laps ahead" of their Japanese rivals in battery technology.

Because batteries account for a large share of an EV's cost, relying on BYD for the component makes it difficult for Japanese manufacturers to undercut their Chinese rival on price, Fukao said.

"In theory, Japanese EVs have no chance of being more cost-competitive than BYD" if they use the Chinese company's batteries, he added.

Suzuki Motor Presdient Toshihiro Suzuki unveils the new e SKY kei vehicle in Tokyo, on Oct. 6.

Battery packs typically account for 30% to 40 % of the total cost of an EV, according to consultancy McKinsey, while some Chinese battery manufacturers enjoy a cost advantage of 25% to 40% over global competitors.

While Japan has a handful of EV battery makers, they are not in a position to match Chinese rivals on cost and competitiveness, Fukao said. BYD, on the other hand, has championed LFP batteries for EVs, a cheap version of the lithium-ion battery which uses lithium iron phosphate for its cathode material.

Kei minicars have been slow to electrify. Much of their appeal rests on their low price, with manufacturers having spent decades perfecting production efficiency and celebrating cost reductions down to a single yen, or less than one cent.

Osamu Suzuki, Suzuki's late patriarch, famously urged engineers to shave "one gram and one yen" from every component.

Suzuki and Toyota Motor-owned Daihatsu Motor, Japan's two biggest kei car makers, have until now stayed out of the passenger kei EV market, focusing instead on commercial vans.

One employee at a kei-car manufacturer questioned whether electric passenger minicars would ever take off with consumers, arguing that the limited range of small EVs was a bigger constraint for passenger cars.

Commercial vehicles offer an easier starting point because their daily driving distances are more predictable, the person said. Kei vans are widely used by farmers and small business owners for routine journeys, making it easier to match battery capacity to everyday workloads.

BYD's entry into Japan with its Racco mini EV in July is now putting pressure on domestic manufacturers to become more competitive.

Jin Tang, a researcher at Japan's Mizuho Bank, said BYD's strategy was likely to extend well beyond Japan. "Asia could become a key battleground for small EVs, which are particularly well suited to driving in the region's cities," he said.

BYD said on Sunday that it would also sell its new mini EV in Macao and Sri Lanka Tang said the Chinese company could be using relatively accessible markets such as Macao to test demand for the vehicle before expanding more broadly.

Asian cities were particularly promising markets for BYD because its combination of feature-rich EVs and competitive pricing was likely to appeal to urban consumers, he added.

The employee of a kei car maker acknowledged that the Racco appeared to have been well received by early reviewers and was "aggressively priced." However, the person said expanding across Asia with kei-sized cars was not a priority for the Japanese company, noting that popular compact vehicles in the region typically have larger engines than Japan's 660 cc kei cars.

Suzuki is looking beyond the domestic market and considering exports of its to Europe. Last year, the European Union decided to introduce a new vehicle category inspired by Japan's kei system to promote EV adoption. Renault and Volkswagen have announced models that qualify for the EU's new vehicle class.

President Suzuki told reporters that he will consider opportunities "step by step" for selling the kei car overseas, but took a cautious note, adding that "First, we want the EV to be tested and refined in Japan." Fukao described the kei minicar segment as a symbolic market for Japanese automakers, embodying the manufacturing strengths they developed after World War II to produce cheaper, higher-quality cars than their western rivals.

But that competitive dynamic is changing as Chinese manufacturers produce increasingly affordable and higher-quality cars, making it harder for Japanese automakers to beat them "head-on," he said.

Fukao added that the Chinese challenge offered Japanese automakers an opportunity to reassess what distinguishes their compact cars and why consumers should choose them over their rivals. "We have to change how we fight," he said.