BYD: Build Your Dreams? Or crush Tesla's?

With an over $100 billion valuation and record-breaking sales, China’s BYD is beating Tesla and German automakers – quietly.

China’s BYD, which stands for “Build Your Dreams” is a relatively new entry into the bustling automobile industry. Initially founded as a battery manufacturer in 1995, its ancestry and experience pale in comparison to the German giants and Elon Musk’s Tesla, which it competes against. Yet by 2023, it has taken over a fifth of the entire EV market in sales, rising to sell 12.87 million passenger vehicles in 2024. The likes of Tesla and Volkswagen are beginning to suffer as BYD's cheap offerings have flooded Europe - whilst the brand name remains utterly unheard of.

Across the world, consumers are choosing to adopt electric vehicles for their cost-efficient value propositions and future-proofed longevity. Although the engine batteries generally require replacement after a few years (depending on the extent of use), the cost to charge them is substantially cheaper than equivalent petrol refuels. With government subsidies and initiatives fuelling demand, it is no surprise that global sales of fully electric and hybrid vehicles are expected to exceed 20 million units in 2025. 

What is surprising, however, is the companies benefiting the most from this momentum. Up until a few years ago, Tesla was the hallmark of electric vehicle innovation. Their saloon-style Model 3 released in 2017 solidified their position as the EV market leader. Yet their dominance is now at risk; only in January their sales dropped in Europe by 45% compared to the previous year, and their modest revenue growth of 1% over 2024 signifies they are beginning to face challenges. Their most threatening competitor, BYD, is now second in sales.

BYD can partly attribute its excellent success to strong domestic performance, holding around a third of China’s EV market share. However, Tesla holds more than 70% of the US’; rather, it is in Europe the competition hinges on. European consumers have eagerly embraced the superior pricing and generous range that BYD has had to offer. The BYD Seal and Tesla Model 3, both comparable saloon-style sedans, share highly similar characteristics and performance, but the Seal leads on a more affordable pricing scheme.

Whilst BYD’s portfolio undercuts Tesla on average pricing, it is in the battery where they have truly secured success. China’s industrial infrastructure means BYD is already well-placed in sourcing its Lithium Iron Phosphate batteries (LFP). 

Through engineering their own LFPs, BYD motors possess superior longevity to their German equivalents, who lack the advantages China has in production. It is also no coincidence that BYD is one of the few automakers to vertically control each step of its battery supply chain. 

Whilst German automobile makers still possess strength where the combustible engine is concerned, they have been punished in the EV market by BYD’s effective strategy of cost competitiveness and battery technology. Not only this, but simple geographical reality also has them struggling to reach rapidly growing markets in Asia such as India.

BYD’s battery superiority is not infallible, however. Tesla, despite indications of its slowdown, continues to be the global leader. Germany’s ailing automobile industry is scrambling to adjust its portfolios into a more future-facing, competitive position to challenge the inroads Chinese EVs have made into Europe. 

As of late, US tariffs by President Trump are also an imminent external threat. Crucially though, it may even be the Chinese domestic market that disrupts BYDs silent rise. Li Auto and XPeng, gaining in popularity, may encroach on BYD’s market share. With Xi Jinping announcing further subsidies to accommodate growth in China’s EV industries, there will be a lot to play for.

Build Your Dreams is advancing into Singapore and the UK regardless, even if very few know its name. European countries rushing to install electrical charging infrastructure alongside traditional petrol stations will only be of benefit. Emboldened by these favourable conditions, and in a manner not unlike its quiet LFP electrical engines, BYD intends to achieve its additional 5.5 million sales target through 2025 with minimal noise.