The Rise and Future of the Eastern Electric Vehicle Giant

Written by: Gavin Chu Kwan Cheung

Edited by: Mike Yang

Michael Förtsch - Unsplash

The Rise of BYD: From Batteries to EVs

Trump, trade wars, and tariffs. These are some words that have encroached on financial magazines for the past months. Since the takeover of the Biden administration, Trump has once again demonstrated his hard stance against China and, this time, against the whole world. While the White House is setting tariffs, his ‘right-hand man’, Mr. Musk, is probably frustrated at his electric vehicle (EV) manufacturer’s performance. Tesla sold only 336,681 cars in Q1 2025, marking its worst performance since Q2 2022 [1], and its shares have also plummeted by 44% since December [2]. Across the Pacific, vehicle sales of Chinese EV manufacturer BYD have grown to 986,098, with annual sales figures reaching US$100 billion [3]. How did this rechargeable battery manufacturer build an EV empire in the span of five years?

To provide a brief backstory of BYD, it was founded as and remains a major battery manufacturing company. It established BYD Auto as a subsidiary back in 2003, but it had limited growth until 2020 [4]. With recent developments in the industry, it is now effectively the largest EV manufacturer globally having produced approximately 150,000 more EVs than Tesla has [5].

Government Backing & Market Strategy

Government support remains the strongest factor for BYD’s success. Over the past decade, the Chinese government poured billions into the EV sector via subsidies, tax breaks, and R&D grants. Industry analysts note that BYD is one of China’s most subsidised companies, with direct subsidies of up to US$2.1 billion alone [6]. The Chinese government’s investments over the years in the EV industry, from industry policies to grants, amounted to a whopping US$230.9 billion [7]. Government mandates like EV production quotas and earlier purchase incentives helped BYD build volume and reduce costs. China’s industrial strategies, such as Made in China 2025 and Go Global, continued to favour the homegrown champion, even after direct subsidies were significantly reduced. Industrial policy and funding provided a strong tailwind, which enabled BYD to invest heavily in factories, R&D, and exports. Behind it all undeniably lies political backing, especially how China dumped investments in BYD when Tesla was at its peak in terms of revenue and international reputation.

BYD has a compelling pricing and market strategy that appeals to vehicle users, typically pricing cars far below its competitors. Its mainstream models started well under half the price of equivalent Tesla cars [8]. Also, it upgrades advanced features without additional costs, including free advanced driver-assistance systems [9]. Domestically, the intense competition from manufacturers like Li Auto, Xiaomi, and Huawei has led to occasional price cuts to maintain production volume [10]. This successfully boosted BYD’s sales to 4.3 million, achieving record sales in 2024. Beyond just low prices, BYD’s wide portfolio through the undercutting of local models means that it competes in every segment from cheap compacts to premium SUVs [11]. It launched Yangwang, a sub-brand, to attract ultra-luxury EV consumers [12]. This stark contrast to most rivals, which only cover a few segments. 

Geopolitical Maneuvering: Beating Trade Barriers

Geopolitical factors play a major part as well, and BYD capitalises on this very well. Before Trump stepped in, the European Union (EU) had long opted for protectionist measures against the manufacturer and other Chinese companies, with tariffs for EVs produced outside of the EU of up to 45% imposed for five years [13]. However, this was easily navigated around by establishing factories in Hungary and Turkey, both within the EU Customs Union and predicted to produce half a million EVs for the European markets [14]. These strategic investments help BYD slip through the fingers of Europe, and will soon make up a certain market share there. Moving back to the Pacific comes the prolonged trade war between the US and China. While the modern-day Cold War may seem detrimental to BYD, it harms the US itself more than its adversary. Despite the ban on Chinese software, Trump’s recent revocation of Biden’s EV mandate weakens Tesla’s market share [15]. Termination of funding for EV infrastructure in the US would only reduce the development scale of Tesla. Meanwhile, while Tesla is facing issues from within, BYD has rapidly expanded across Southeast Asia, Africa, Latin America, the Middle East, and Europe [16].

The three aforementioned factors create the perfect chain reaction to a successful recipe. Governmental support allows BYD to have competitive pricing, which then enables BYD to play a strategic role in the global market. It can be safe to say that BYD has a steady future in the EV battlegrounds.

Something that is less talked about is BYD’s soft power and global brand strategy, which is a central pillar of its long-term global ambitions. Just last year, BYD became the first Chinese automaker to sponsor the UEFA European Championship [17]. This was a particularly smart move, embedding the brand into mainstream European culture and boosting visibility in a politically neutral setting. Moreover, BYD has constantly been extending its brand name through Memoranda of Understanding (MoUs) with several companies. For instance, French car leasing company Ayvens signed an MoU with BYD and will lease their vehicles to clients in Greece, Hungary, Portugal, Finland, Ireland, Romania, and Sweden [18]. Taking a step further, countries have also signed MoUs with the Chinese manufacturer, like Japan which utilised BYD vehicles for its hospitals and government facilities [19]. BYD is simply on another level compared to other manufacturers – they have made good use of state-aligned soft diplomacy, opening markets that might originally have been cautious towards Chinese investment and successfully disarming political resistance.

Recent trends have also shown an improved global perception of Chinese brands. Although mainstream media may perceive China as ‘the West’s number 1 enemy’, BYD sales are picking up across Europe with a 362.5% increase in sales [20]. Younger, price-sensitive car buyers in Europe appreciate the great value-for-price BYD offers. Additionally, China’s Belt and Road Initiative has normalised Chinese tech presence in Latin America, Southeast Asia, Africa, and the Middle East, in which Chinese products are more accessible and perceived as aspirational. To BYD, these markets are crucial not just for sales but for establishing cultural legitimacy and long-term brand loyalty. Whilst the criticism towards China from Western officials may be inevitable, studies have found that many consumers distinguish the brand from its origin [21]. This is especially true if the product delivers quality, reliability, and value. For BYD, this is an opportunity to present itself as an individual global brand and not just a ‘Chinese state champion’.

Conclusion

Looking ahead, BYD’s future will be shaped by its ability to battle geopolitical issues and the evolution of its global brand image. However, rising trade barriers, political commentaries, and intensifying competition from the internal Chinese market. Ultimately, it all comes down to BYD’s agility, and whether it can convert its current dominance into a long-lasting global leadership in the EV world will soon be answered.

REFERENCES

[1] Morris S, Inagaki K and White E, ‘Tesla suffers worst quarter since 2022 as deliveries tumble’ Financial Times (San Francisco, London and Shanghai, 2 April 2025)

[2] Isidore C, ‘Tesla sales plunge: Biggest decline in history’ CNN (California, 2 April 2025) <https://edition.cnn.com/2025/04/02/business/tesla-sales/index.html> accessed 30 April 2024

[3] Inagaki K, ‘BYD car sales soar as Tesla struggles in Europe’ Financial Times (London, 1 April 2025) <https://www.ft.com/content/c97bd5e4-4eaa-4850-b94c-583fa544250c > accessed 30 April 2024

[4] He J, Liao S, Li X and Yu P, ‘Research on Marketing Strategy of New Energy Vehicles in China: Take BYD Brand as an Example’ (January 2022)

[5] Richter F, ‘BYD Pulls Ahead of Tesla to Become Largest EV Maker’ Statista (3 January 2025) <https://www.statista.com/chart/33709/tesla-byd-electric-vehicle-production/> accessed 30 April 2025

[6] Nelson H, ‘What China’s BYD really wants from EV investments in Mexico’ (Atlantic Council, 29 January 2025)

[7] Kennedy S, ‘The Chinese EV Dilemma: Subsidised Yet Striking’ (CSIS, 20 June 2024) 

[8] ABI Electric Vehicles Research Service, ‘Upset Alert: How BYD Sidestepped Tesla to Become EV Market Leader’ ABI Research (26 January 2024) 

[9] Burnett S, ‘BYD announces “free” smart driving updates to all models’ Automotive World (11 February 2025)

[10] Li G, ‘China’s electric-vehicle leader BYD posts record sales in 2024’ Financial Times (Hong Kong, 2 January 2025)

[11] Zhang P, ‘BYD rolls out new, less expensive variants for 2 NEV models to further undercut fuel cars’ CnEVPost (19 February 2024) 

[12] Johnson P, ‘BYD’s first ultra-luxury electric sedan launches at under $90,000: Meet the Yangwang U7’ Electrek (27 March 2025) 

[13] Race M, ‘EU hits China with big taxes in electric car sales battle’ BBC (London, 4 October 2024) 

[14] Piovaccari G, ‘China’s BYD expects to pick location for third European plant in 7-8 months’ Reuters (Milan, 18 March 2025) 

[15] Shepardson D, ‘Trump revokes Biden 50% EV target, freezes unspent charging funds’ Reuters (21 January 2025) 

[16] Muller J, ‘Trump’s end to “EV mandate” could weaken automakers against China’ Axios (23 January 2025)

[17] UEFA, ‘BYD becomes Official E-Mobility Partner of UEFA EURO 2024’ (12 January 2024) 

[18] Ayvens, ‘Ayvens extends its partnership with BYD to seven new European countries’ (Paris, 29 April 2025) 

[19] Chen DY, ‘BYD struck deal with Japanese government to power critical infrastructure with EVs’ CarNewsChina (5 December 2024) 

[20] Waldersee V, ‘BYD to introduce two plug-in hybrid models in Germany this year’ Reuters (Stuttgart, 29 April 2025) 

[21] Li C, Li D, Chiu C and Peng S ‘Strong Brand From Consumers’ Perspective: A Cross-Cultural Study’ (2018) 50(1) JCCP 116