BYD is already beating Tesla. Its new Europe playbook shows why it’s poised to dominate the EV race

Now one other nice energy—China—is placing down stakes right here within the coronary heart of Europe. By yr’s finish, the primary electrical automobiles will roll out of a manufacturing unit on this website, courtesy of Chinese language EV maker BYD Auto—the biggest seller of battery-powered cars in the world, and increasingly the one legacy automakers most fear.

Starting in 2026, this plant will produce about 150,000 compact all-electric sedans a yr, best for Europe’s slender streets; manufacturing is predicted to rise to 300,000 vehicles a yr by 2030. If BYD’s intentions weren’t clear sufficient, a blizzard of billboards and tv advertisements throughout the continent options the slogan “Made in Europe, for Europe.” Greater than 5,200 miles from headquarters in Shenzhen, the factory is a crucial piece of BYD’s all-out push for global primacy, in an business that was just about created by—and till very not too long ago dominated by—a way more acquainted identify: Tesla.

Name this Elon Musk’s worst nightmare, come to life in concrete and metal. By some metrics, Tesla still
has swagger: Its valuation of round $1 trillion is seven instances as excessive as BYD’s—larger, certainly, than another automaker’s. Tesla stays the main EV model within the U.S., the place Chinese language producers are successfully blocked by tariffs of greater than 100%. However globally, BYD is racing forward of its opponents. And its success is an equally bad-dream-come-true for older Fortune Global 500 automobile giants, like GM, Toyota, Ford, and Volkswagen, whose immense clout has for many years formed the politics and financial prospects of the U.S. and Europe.

PHOTOGRAPHS BY BALINT BARDI for Fortune

China produced greater than 70% of all EVs final yr, in keeping with the Worldwide Power Company, whereas European producers produced 14%, and People lower than 10%. Within the $4-trillion-plus international auto business, the breakneck tempo development methods of Chinese language carmakers, led by BYD, have damaged a dam. Volkswagen’s EV transition has lastly gained traction; in July, it stated its EV gross sales had almost doubled yr over yr within the first half of 2025. Nevertheless it’s shedding market share to BYD almost all over the place, particularly in China. And VW and different European automakers are beneath siege at residence: Chery, Xpeng, and Geely are among the many Chinese language corporations scouting for European manufacturing websites, which might assist them keep away from tariffs.

Till not too long ago, few imagined that BYD, or Construct Your Goals, to make use of its flowery full identify, might crush age-old titans. However its trajectory lately has been startling: It offered 4.25 million vehicles final yr—10 instances the quantity in 2020—and goals to promote 5.5 million this yr; most of its 2024 gross sales have been plugin hybrids. Two new BYD factories in China will every have larger manufacturing capability than the world’s largest auto plant at the moment, the Volkswagen advanced in Wolfsburg, Germany. With revenues up 27% to $108 billion in 2024, BYD has catapulted up the Fortune Global 500 ranks.

Worldwide, Tesla offered 384,000 vehicles within the second quarter of this yr—whereas BYD offered almost 607,000 EVs in the identical interval. (Seemingly in response, Musk parted ways with his operations chief in the U.S. and Europe in June and took over the role himself.) Tesla gross sales have struggled all over the place, as more buyers appear to be turned off by Musk’s politics as well as Tesla’s high prices and limited selection of models. However the shift has been notably noticeable in Europe, the place BYD outsold Tesla for the primary time in Might.

“From the primary electrical automobile to the primary 1 million vehicles, it took us 13 years,” Stella Li tells me once we meet in Vienna. Li, BYD’s govt vice chairman, heads its worldwide growth and is the general public face of BYD exterior China. “Then, from 1 million to three million it took us 18 months,” she says. “Now we’re including 1 million vehicles each two months.”

The query is, can BYD maintain this breathless tempo, and nonetheless thrive—even when the U.S. stays off-limits? The reply might emerge in Europe, the place 450 million folks stay throughout dozens of nations, a lot of them rich economies. BYD offered almost 55,000 vehicles in Europe between January and Might. That’s a tiny 1% of the regional market—however triple its gross sales in the identical interval final yr. And BYD can supply rock-bottom costs—sponsored by China’s authorities, say analysts—to realize market share.

“What they’re doing now’s seducing the client, and later they’ll take into consideration the earnings,” says Felipe Munoz, an Italy-based analyst for automotive intelligence agency JATO Dynamics. On a visit to his native
Colombia this yr, Munoz was shocked to see roads stuffed with BYD vehicles, as soon as a uncommon sight. He believes Europe might quickly look the identical. “In the event that they continue to grow at this pace,” he says, “Europe ought to count on huge disruption within the coming months.

On a glowing July morning, I’m cruising down the Champs-Élysées, the solar peeking by means of the tall airplane bushes. For a second I can nearly glimpse the long run Munoz envisions: Europe’s most well-known avenue, jammed with BYDs. I’ve briefly borrowed a Dolphin Surf from a BYD showroom two blocks away, the place it sells for lower than €20,000 ($23,200), barely half the value of Tesla’s Mannequin 3. Simply as I’m considering the thrill of free parking close to the Arc de Triomphe—compact EVs park totally free in Paris—a modern black BYD Seal, a plug-in hybrid costing about €47,000, slides into the following lane.

To achieve a world foothold, BYD has taken a path drastically completely different from that of different automakers. It was based in 1995 as a battery firm—a transfer that now appears brilliantly prescient—by Wang Chuanfu. Wang, an engineer orphaned in his teenagers, borrowed cash from his cousin to launch the corporate. BYD had some success promoting lithium-ion batteries to client electronics producers—together with within the U.S., the place Stella Li, then a statistician at BYD, as soon as spent months wooing cellphone maker Motorola.

Andy Wong—AP Picture

However Wang reinvented BYD in 2003 when he bought a failing Chinese language state-run carmaker, having concluded that his batteries might extra simply remodel the auto business than the tech world. That transfer, in flip, attracted a transformative investor: Warren Buffett, who plowed $232 million into BYD in 2008, by means of Berkshire Hathaway, for a ten% stake, successfully enabling it to develop into a aggressive automaker.

Early automobiles have been deemed clunky and ugly: “Have you ever seen their vehicles?” Elon Musk chuckled in
2011, when requested whether or not BYD fearful him. However Buffett’s stamp of approval helped lure extra capital,
and continues even at the moment to assist BYD open doorways. “A few years in the past nobody in Europe, and definitely not in America, had heard of this Chinese language firm BYD,” says Sándor Nagy, deputy mayor of Szeged. “However Warren Buffett: They’ve heard of him.”

On this nook of Hungary, BYD’s disruption is effectively underway. Hungarian far-right Prime Minister
Viktor Orbán—a detailed ally of President Trump—has spent years luring Chinese language buyers. In Might, Li flew to the nation with Wang to announce that BYD’s European headquarters would quickly open in Budapest and embrace a analysis middle with 2,000 engineers.

Akos Stiller—Bloomberg/Getty Pictures

The Hungarian enterprise is a departure for BYD. For many years, its technique has centered round tight management of its provide chain, together with probably the most useful components of all EVs: batteries, powertrain electronics, and driver help methods. The corporate makes about 16.4% of the world’s EV batteries. It additionally produces its personal semiconductors, has stakes in mining corporations for batteries’ uncooked supplies, and even exports vehicles by itself freighters. In 2023, the Swiss financial institution UBS concluded that the corporate’s tight vertical integration gave it at the least a 25% value benefit over automaker rivals.

BYD’s presence might remodel Szeged, a quiet college city of 200,000 folks. The corporate has stated its manufacturing unit will rent as much as 4,000 staff, maybe rising to 10,000. However BYD stands to realize excess of the host metropolis. By producing inside Europe, it avoids tariffs of about 17.5%, imposed final yr after the E.U. accused Chinese language automakers of undercutting competitors by means of state subsidies. (Analysts at Germany’s Kiel Institute for the World Economic system estimate BYD acquired about €3.4 billion, or about $3.76 billion, in subsidies between 2018 and 2022.)

Many analysts warning that this price of growth received’t be sustainable for BYD and different Chinese language EV makers. To this point, it has entailed mounting debt and a willingness to forgo earnings, and snags have ensued. Suppliers have reported BYD taking many months to pay their payments, and in July, the Wall Road Journal stated BYD had billions in unexplained “exterior present account” costs on its stability sheet. BYD stories complete debt of about $5.67 billion, however analysts informed the Journal the corporate’s money owed to suppliers had risen to $54 billion over the previous 5 years. (BYD says its monetary particulars are totally disclosed in quarterly audited stories.)

Complicating issues, Chinese language automakers are engaged in a gloves-off battle to seize slices of the rocketing EV market by slashing costs. BYD sells its wildly standard Seagull hatchback, referred to as the Dolphin Surf in Europe, for beneath $8,000 in China. “The brutal worth struggle in China’s auto business is obliterating profitability,” S&P World Rankings warned in June.

BYD and others don’t appear to care, at the least for now. Chinese language automakers launch new fashions at
twice the speed of Western rivals and at half the funding value, in keeping with New York–based mostly consultancy AlixPartners. Since 2020, when Tesla unveiled the Mannequin Y, BYD has launched about 40 new automobiles.

“Chinese language automakers prioritize time to market above all else,” says Stephen Dyer, head of AlixPartners’ Asian auto business crew. Their playbook isn’t Detroit or Germany: It’s Silicon Valley. “They should preserve merchandise recent,” he says; a Chinese language EV “is far more like a smartphone.

A diminutive girl with nearly frenetic power, Stella Li has emerged as BYD’s essential ambassador and strategist, with titles together with CEO of BYD Americas and Europe. Li zips throughout the globe furiously, not often making it again to her present residence in Los Angeles, she says. The day I meet her in Vienna, she has flown in from Istanbul and can sleep that evening in Germany.

Europe is essential to BYD’s international push, Li says: “If we could be profitable right here, we could be profitable in another nation.” Li has come to Vienna to ink a provide deal for the Szeged plant with Austrian metal producer Voestalpine. The signing ceremony takes place on a rooftop within the museum quarter, with a sweeping view of the realm’s ornate domed buildings.

For Li, it’s additionally an event to tout BYD to a choose viewers of metal executives and Chinese language diplomats. A blur of movement in a pastel-blue pantsuit, she bounces about in thick-soled white sneakers, her arms darting round, whereas a wall-size display behind her reveals a collection of BYD statistics.

In a rapid-fire cadence, she says BYD will add a gross sales presence in 12 extra European international locations this yr, totaling 1,000 shops. The corporate has simply rolled out its one-millionth Seagull, and in February, it launched its God’s Eye driver-assistance software program, which it plans to carry to Europe. Maybe most crucially, its new flash-charging know-how can take drivers 670 miles on a single cost, with 250 miles of drive time for each 5 minutes of recharge—as quick as pumping gasoline. “It means we are able to drive from right here to Rome with out stopping!” Li gushes, whereas a map of Europe flashes on the display.

Once we sit down collectively, I ask Li whether or not she feels vindicated by BYD’s development. She says the corporate was lengthy underrated as a battery producer, and that was one motive Wang pivoted to creating vehicles. “We have been too small,” she says. “No one checked out us.”

These days are gone. In current months, BYD has employed a number of executives from European automakers like Stellantis. The automobiles whose designs Musk as soon as mocked at the moment are crafted by engineers whom BYD has lured away from Audi and Alfa Romeo. Musk is now not laughing: In 2023, he referred to as BYD vehicles “extremely aggressive”—a comment that proved an understatement.

In Europe, Li says, the corporate will construct gross sales partly by tapping the expertise and networks which have outlined the area’s business for a century— beating its rivals, in a way, by co-opting them. “European corporations have a legacy; they’ve a number of traditions,” she says, admiringly. “The one half they’re an excessive amount of behind on is EVs and plug-in hybrids. In China, we put all our cash, all our R&D bills, into that.” That call is clearly paying off—and will eternally rewrite the historical past of a crucial business.

This text seems within the August/September 2025 difficulty of Fortune with the headline “BYD beat Tesla. Now it’s within the driver’s seat.”