BYD Is Winning the Global Race to Make Cheaper EVs

Last fall in Malta, BYD began selling the Atto 3, an all-electric compact crossover. Strip away the company’s futuristic logo, and it looks almost indistinguishable from other small, sporty SUVs. But inside it’s full of treats, including heated seats in vegan leather and a 360-degree rotating touchscreen. The 60-kilowatt-hour battery gives it a range of 260 miles, enough to circle Malta’s main island twice. And by European standards, it’s inexpensive, at about $28,000. It’s a novelty in Malta. But the real reason BYD is entering the European Union’s tiniest member state? The company’s happy place is emerging markets and countries with no domestic auto industry to defend: “You can basically describe them as a ‘chicken rib market,’ ” says Yu Zhang, the managing director of consulting firm AutoForesight in Shanghai. “All the chicken ribs added up together, it’s more than 10 million cars.”

After increasing its annual sales in China 15 times over, to 3 million cars in only three years, BYD is now exporting to roughly 95 markets, including 20 new ones this year. The company is building, has recently opened or has announced plans for assembly plants outside China in 10 countries on three continents. The speed and scope of this expansion have caught the global auto industry off guard and triggered protectionist tariffs in the US and EU, where policymakers fear Chinese players such as BYD will, in the words of Elon Musk, “demolish” their domestic automakers.

BYD, which stands for “Build Your Dreams,” is the brainchild of Wang Chuanfu, a 58-year-old battery scientist who in the 1990s saw an opportunity to start a rechargeable battery company to challenge Japan’s hold on the industry. It began by focusing on batteries for mobile phones and power tools, but in 2003 it decided to pursue cars. Wang’s battery and manufacturing innovations, cushioned by China’s EV-friendly government policies and the scale of its domestic auto market, have helped BYD do what Tesla Inc., Ford Motor Co. and the rest of the auto industry haven’t: build an affordable electric car for the masses and make money doing it. Since introducing a new battery technology in 2020, BYD has gone from being an also-ran in China’s crowded car market to cracking the top 10 automakers in the world. It’s unseated Volkswagen AG from its decade-plus perch at the top in China and briefly—in late 2023—surpassed Tesla to become the biggest seller of pure electric vehicles globally.

It’s a playbook reminiscent of those of Toyota Motor Corp. and Hyundai Motor Co., which grew out of Japan and Korea’s postwar industrialization; they exported for years before eventually setting up factories overseas. Like them, BYD started out with cheap cars but moved up the scale, leveraging muscular industrial policy, lower costs and more efficient manufacturing. As BYD makes its global push, it’s facing bipartisan anti-China sentiment in Washington that has echoes of the Japan Inc. hysteria of the 1980s, when the US feared being eclipsed as an economic superpower. The concern is that, as with solar panels and steel, electric cars are part of China’s larger economic strategy to amass political power through industrial and technological supremacy.

BYD executives say the company is just trying to sell cars and fight climate change. But it also wants to do what no Chinese carmaker has ever done: become a globally recognized consumer brand. It’s hoping to transcend geopolitics through the appeal of a plug-in hybrid sedan that can go 1,200 miles without stopping at a pump or a charger. Stella Li, BYD’s executive vice president and the face of its global expansion, says she wants consumers to see BYD as “a technological pioneer in changing the world.” She adds, “Just like when you are using an iPhone, you may not think it’s from a particular country. It’s just part of your life.”

This past summer, President Joe Biden imposed a 100% tariff on EVs exported from China; in September his administration proposed a ban on the sale or import of connected cars with Chinese hardware or software, underscoring a fear in US national security circles that internet-connected cars could become tools of Chinese surveillance or cyber warfare. In October, the EU slapped a 17% tariff on BYD’s EV imports, part of a probe into government subsidies in the Chinese auto industry. According to a recent study by Germany’s Kiel Institute for the World Economy, BYD receives “particularly high subsidies,” and China as a whole spends anywhere from three to nine times more than other democratic, market-based economies on subsidies.

Like many Chinese executives, Li bristles at the notion that BYD owes its success to government largesse and calls subsidy accusations “completely groundless.” BYD is so formidable because it’s emerged victorious from China’s brand of state-led capitalism, which weeds out weak or inefficient players by forcing them to compete in a protected, carefully calibrated sandbox. For Li, that victory was hard won, the result of grit and determination. “They cannot beat us and can only attribute our success to other factors,” she says. “We’d rather just show our muscles than make explanations to them.”

Still, BYD has benefited from government incentives, even if the full extent of it is opaque. “There is not a single major ‘private’ company that succeeds in China without the backing of the Party,” says Michael Dunne, a consultant and former General Motors Co. executive who spent more than two decades working in Asia. BYD is part of a wave of Chinese automakers fulfilling a government directive to combat a domestic economic slump by cranking up exports. But its bigger goal is localizing manufacturing around the world, so it can sidestep tariffs and become a household name in each market. “No company in recent memory has expanded globally at such a rapid clip as BYD,” Dunne says. “It sees a need to strike while the iron is hot, to move as fast as possible before others catch up.”

Now executives from Detroit to Tokyo have to figure out how to compete with BYD, and they know tariffs alone won’t cut it. For years, they couldn’t or wouldn’t make the case for cannibalizing profitable business with an expensive, technologically novel experiment such as the electric vehicle, and now it’s unclear if they’ll ever catch up. The Alliance for American Manufacturing (AAM), a lobbying group representing American companies and labor groups, has called China’s EV offensive “an extinction-level event” for the American auto industry. They realize BYD has built EVs that many Americans, starved for an affordable option, would probably be happy to buy.

Wang was thinking about cars as early as the 1990s. To him, BYD had always been more than just a low-cost battery manufacturer. It was a research and development machine that would use rechargeable batteries as a launchpad for products that could change entire industries. The orphaned son of farmers in rural Anhui province, he was raised by his siblings and earned an undergraduate degree in metallurgical physical chemistry in 1987, then a master’s from the Beijing Non-Ferrous Research Institute, where he became a government researcher.

After a few years, he became convinced he could make cellphone batteries more cheaply than Japanese companies such as Sony Group Corp. He moved to Shenzhen, a fishing village that had been transformed, as China’s first special economic zone, into an electronics and textile manufacturing hub and would eventually become the country’s version of Silicon Valley.

Wang started BYD in 1995 with a $350,000 loan from his cousin. He reasoned he could replace expensive automated Japanese manufacturing systems with one that made use of an abundance of low-cost Chinese workers to assemble batteries manually. But cheap labor was just a piece of the puzzle; the goal was to be as vertically integrated as possible, making not only batteries but also the components, tools and equipment necessary to produce and test them. “Some say we did vertical integration for saving costs. In reality, it was a product of being born out of stress,” Wang told the audience at a product debut in Shenzhen in 2020. BYD received “zero support” in its early days, because EVs were not seen as a promising industry at the time, he said. “We had no choice but to rely on ourselves.”

The company got its first big break thanks to a young saleswoman named Li Ke, known outside Chinese-speaking circles as Stella Li. If Wang is the visionary engineer guiding BYD’s elaborate skunkworks, Li, the company’s No. 2, is the driving force behind its expansion, representing BYD in meetings with customers such as Apple Inc. or leaders including the president of Brazil. She graduated from China’s prestigious Fudan University with a degree in statistics and joined BYD in 1996 as a marketing manager for global exports. Wang sent her to Europe and the US to set up offices, and her efforts in that role are the stuff of company lore.

In her mid-20s and with a rough grasp of English, Li showed up with a box of battery samples and spent months courting the procurement team at Motorola’s battery R&D campus in the Atlanta suburbs. Motorola executives thought she was a pest, according to one who dealt with her at the time, but the cost savings she was promising were so great and Li was so persistent that they eventually agreed to test BYD’s battery cells. It took two years of evaluation to win the contract. At one point Motorola was so impressed with Li that the company tried to hire her for its sales team, says the executive, who asked not to be identified discussing private matters. Back then, Li said BYD stood for “Bring Your Dollars.” The company later rebranded to the loftier “Build Your Dreams.” (BYD denies its name’s former meaning.)

About 5 feet tall, with short-cropped black hair, Li has lived in the US off and on since the early 2000s when she came to set up the battery business in Chicago, then moved to Los Angeles. Her official responsibility is head of BYD Americas, though her remit is global sales. She can be brusque with subordinates and charming and indefatigable with customers and business contacts. Li, who usually wears a pastel pantsuit with sneakers, says she likes boxing, weightlifting and spending time with her kids when she isn’t working, which is almost never. Li is also Wang’s partner and mother of their two children, an open secret within the company, according to people familiar with the matter. Wang’s first wife was listed as a BYD co-founder in its prospectus when it went public on the Hong Kong exchange in 2002. (BYD has previously dismissed talk of Li and Wang’s relationship as “rumors”; it declined to comment on personal matters or anything it considers not directly related to the company.)

BYD has made Wang a billionaire and Li a centimillionaire—with a stake worth $461 million, according to Bloomberg data. She’s friends with Li Lu, the former Tiananmen Square protest leader-turned-billionaire hedge fund manager, who she says introduced her and BYD to Warren Buffett and the late Charlie Munger of Berkshire Hathaway Inc. Berkshire invested $232 million in BYD in 2008 and at one point owned 20% of the company’s Hong Kong-listed shares—equivalent to 8.25% of the entire business—before cutting its stake to less than 5% this summer. (Li Lu and Buffett declined to comment.)

A year after taking BYD public in 2002, Wang bought a majority stake in a failing state-run car company, Xi’an Qinchuan Auto Co. Angry investors called BYD, appalled that it was wading into a market it knew nothing about—Wang didn’t even know how to drive at the time. But he saw cars as a natural extension of BYD’s battery business. In 2004 he gave a speech at the Beijing auto show declaring his intention to use batteries to change the future of the auto industry.

It took almost 20 years for Wang to prove he was right. In 2008, BYD became the first company to produce a plug-in hybrid at commercial scale. Although the engineering was impressive—its battery range bested the Chevrolet Volt—the F3DM looked like a stale knockoff of the Toyota Corolla and failed to gain traction in either the US or China. The all-electric E6, which Wang touted at the Detroit auto show the following year, was later dinged in reviews for its “crude” handling, inferior range and $58,000 sticker price.

Wang continued to pour money into product development, eventually building 11 R&D centers and a vertically integrated company that made everything including batteries, solar panels, printed circuit boards and semiconductors. Still, popularizing the electric car remained elusive. In 2015, when things were looking particularly grim, Wang faced an audience of skeptical Chinese car industry analysts. He brushed off their finance questions and pivoted to talking about one of his pet projects, “wheels that can drive in all dimensions,” remembers Yuqian Ding, head of China autos research at HSBC Qianhai Securities Ltd. in Beijing. The financial analysts thought he was crazy, but eight years later at the Shanghai auto show, Wang was showing off the Yangwang U8. The $155,000 hybrid SUV resembling a Land Rover crab-walked onto the stage, then did a 360-degree rotation thanks to four electric motors independently powering its left and right wheels to simultaneously spin in opposite directions.

If the Motorola deal transformed BYD once, the Blade battery, unveiled in 2020—and now powering all of the company’s cars—would do it again. Most researchers outside China were trying to improve EV range by experimenting with nickel-based batteries. Wang chose lithium iron phosphate, or LFP, which was cheaper and less fire-prone but had been largely dismissed because it lacked energy density. Using LFP allowed Wang and his team to streamline the battery pack, do away with some of the clunkier fire-prevention components and fuse cells directly to the chassis. These improvements proved LFP could be harnessed for longer-range EVs, drastically reducing overall cost. It was so competitive that Toyota uses it in its cars in China, as do many Chinese carmakers.

But when it comes to BYD’s signature battery breakthrough, Bloomberg Businessweek has learned that Wang and his engineers had a little help from Apple. As part of Apple’s top-secret electric-car project, BYD and Apple worked together on a battery system for the car, according to people familiar with the matter. Apple was impressed with BYD’s LFP cell technology and wanted to combine it with its own pack designs to maximize EV range while minimizing fire risk. Apple engineers sketched out the original idea for a pack that would house LFP cells developed and manufactured by BYD that would be highly customized for an Apple car.

Unlike Wang, who dismissed stock analysts to pursue engineering goals still years away from commercialization, or Musk, who used his cult of personality to turn capital markets into a spigot funding his grandiose plans, Apple obeyed the rules of Wall Street: Minimize risk and maximize return. It ditched its car project in February after failing to achieve a fully autonomous vehicle. Meanwhile, BYD had been pursuing a battery breakthrough. Today’s Blade batteries don’t contain any IP from the iPhone maker, but they were influenced by its dealings with Apple years ago. Apple and BYD declined to comment on their collaboration, but BYD did say that the concept for the Blade originated with its engineers, and it holds all patent rights for the Blade.

To make it, Wang tapped a supply chain he’d been investing in for 15 years. BYD has equity stakes and long-term agreements with lithium miners, refiners and makers of cathode material, a key battery component. His cousin Lv Xiangyang, the same one who lent him the money to start BYD, is a director of the company and chairman of Youngy Co., which operates a lithium processing plant in western Sichuan province. Combining this network with BYD’s scale as the world’s third-largest battery maker and a larger ecosystem of government-backed financing means Wang’s input costs are lower than other battery makers, according to consulting firm CRU Group.

BYD’s Blade was introduced at a glitzy product debut in Shenzhen in March 2020. Only a few months earlier, Tesla had opened its Shanghai gigafactory, suddenly making EVs desirable and cool in China in a way that a decade of government incentives hadn’t. That summer, when BYD rolled out its new all-electric Han luxury sedan priced just above $32,000, it was clearly no knockoff; the company had hired expensive designers from Europe, led by former Alfa Romeo and Audi designer Wolfgang Egger. With its European style, 375 miles of range, leather seats and high-end driver assistance features, the Han comfortably undercut rivals on price and became a hit. Egger’s team of more than 1,000 designers would allow him to keep up with the frenetic product cadence of the Chinese car market, pumping out new vehicles or refreshes in as little as 18 months versus what is usually a three- to four-year cycle in the US and Europe.

Meanwhile, when the Covid-19 pandemic erupted in China about the same time, Wang retooled his production lines previously used for assembling smartphones to make N95 masks. In a matter of weeks, BYD became the world’s biggest mask manufacturer, adding more than $1 billion to its coffers thanks to contracts with Japan’s SoftBank Group Corp., the state of California and others clamoring for personal protective equipment.

Unlike the rest of the global auto industry, BYD avoided factory shutdowns and supply chain snarls. It had a steady supply of chips made by its semiconductor unit and an abundance of masks for Chinese workers living in tightly controlled on-campus dormitories. “When everybody else was lying flat during Covid, our factories were running 24 hours,” Li says. “When everybody else is having a work-life balance, we only have work balance.” BYD’s electric and hybrid vehicle car sales rocketed from just under 180,000 in 2020 to 1.86 million in 2022, giving Wang and Li the cash to fund a new overseas push.

Li planted the seed for Brazil—a market with 200 million people—in 2015. It began with a BYD electric bus chassis made in a factory an hour and a half north of São Paulo. Two years later, BYD started making solar panels for commercial and residential rooftops. By 2020, BYD had won generous incentives to build its next Brazilian plant in Manaus, 2,400 miles north on the banks of the Amazon River, where workers take components imported from China and assemble them into battery packs.

The next year the cars finally arrived. Li introduced the Tang, an electric seven-seat SUV, followed by the Han sedan, and then an electric hatchback with sliding doors called the D1, which BYD rented out at discount rates to taxi drivers. In June 2023, the Dolphin, a roomy hatchback that could go roughly 250 miles on a charge, went on sale for a little less than $27,000. Its features—six airbags, cruise control, a panoramic camera and a rotating multimedia screen—forced a round of price cuts from French carmakers Renault SA and Peugeot SA.

Li was drawing on a playbook she has used whenever entering a new market: Do intensive market research; win hearts and minds on the ground; then tap BYD’s vast product portfolio to deliver whatever the locals want. One city might want a rail transit system, another an electrified municipal bus fleet. In London she started out with electric city buses to introduce the brand, then moved on to passenger cars. She did the same in Jakarta.

In Brazil the playbook was jobs. In the spring of 2023, Brazilian President Luiz Inácio bio Lula da Silva had gone to China and won investment pledges worth about $10 billion from President Xi Jinping, who helped Lula deliver on his campaign promises while strengthening ties between the two countries. This included a meeting with Wang. By October of that year, BYD was building its first car assembly plant outside of Asia and upgrading faltering infrastructure, a perennial bottleneck for Latin America’s largest economy. On that trip, Li and Wang flew to the northeastern state of Bahia to announce that BYD would revive a former Ford factory, with plans to make 150,000 cars a year and call thousands of laid-off Brazilians back to work. They would also build an R&D center in economically deprived Salvador and replace the city’s aging bus fleet with a BYD electric monorail.

Next came the brand-building. In June, when BYD introduced a hybrid sedan meant to challenge the Toyota Corolla, it tapped into Brazil’s national religion—soccer—and its hero, Pelé. A model sold in China as the Destroyer 05 was rebranded in Brazil as the King, a nod to Pelé’s nickname. BYD’s spendy ad campaign included a 60-second commercial featuring images of the late football hero who led Brazil to three World Cup championships. After only three months on the market, BYD’s King soared to near the top of the sales charts for the country’s bestselling sedans, surpassing the Honda Civic.

Next on Li’s list: Mexico. As in Brazil, Li formed a partnership with taxi drivers through a ride-hailing app in Mexico City. She sold electric work trucks to Mexican conglomerates such as Grupo Bimbo SAB de CV and Cemex SAB de CV, and cut a deal with El Puerto de Liverpool, Mexico’s ubiquitous luxury department store chain, to sell EVs and at-home chargers at the mall. Last year she began rolling out sleek showrooms across Mexico City and Guadalajara trumpeting the arrival of BYD’s passenger car models, including the Han.

Then this spring, Li gathered more than a thousand journalists, influencers and potential customers at a convention center in Mexico City for a milestone—BYD’s first debut of a new vehicle outside China. It wasn’t just the location that was novel. With its Shark, BYD was about to unveil its foray into the unassailable dominion of the US auto industry: the pickup truck. Attendees munched on hot dogs and French fries as a pair of mariachis strummed guitars between two trucks—one set up to show off its in-car karaoke, the other demonstrating how it could be a power source on camping trips. On stage, a promo video showed a man on a mountain road hopping out of his truck to photograph an eagle.

The timing was awkward to say the least. Hours earlier, President Biden had appeared in the White House Rose Garden to announce he would raise tariffs on Chinese imports, including a steep increase in the levy on Chinese electric vehicles to 100%. Li shrugged off reporters’ tariff questions and pivoted to what she wanted to talk about—the technology inside the Shark. “It’s a game changer,” she told Bloomberg News. “It means BYD is turning our shift [sic] to become a global company.”

The plug-in hybrid Shark isn’t meant to go head-to-head with full-size gas guzzlers like the Ford F-150 that are popular in the US. It’s a midsize truck whose standout feature is that it can go 520 miles without stopping for a charge or a refill. That’s made possible by a creation from Wang’s legion of engineers: a dual-mode hybrid power train, which runs electric 80% of the time but has an onboard gas generator to recharge the battery and power the wheels when extra oomph is needed.

At about $53,400, the Shark targets rich Mexicans who want to tow a boat or a camper for a weekend trip—anything up to 5,500 pounds. It’s also aimed at Brazilian farmers and ranchers and Aussie construction workers. To blend into each one of these markets, Li and her team try to imbue BYD with a chameleon-like quality and take pains to downplay geopolitics. “We should not classify a brand simply by the origin of its technology,” says Jorge Vallejo, who oversees the Mexican business. Once a customer sees the “superiority of efficiency, performance and low price, well, it’s a very logical decision.”

Despite Li’s stated efforts to avoid politics, BYD’s Mexico plans have been ensnared in a geopolitical tug-of-war. Chinese investment in Mexico has been climbing ever since former President Donald Trump’s tariffs blocked Chinese companies from selling directly to the US. BYD is bidding to supply the Mexican government with a new EV fleet and waiting to hear what kind of state support it will receive for an assembly plant it wants to build there. US officials, anxious that Mexico could become a gateway for Chinese automotive exports, have urged the Mexican government to stop handing out subsidies to Chinese carmakers. That decision will fall to Mexico’s newly elected president, Claudia Sheinbaum, a climate scientist who favors EV subsidies, public transit and foreign investment, to expand the local auto industry. BYD recently paused plans for the Mexico plant to wait for the outcome of the US presidential election.

When asked, as she is constantly, about plans to enter the US car market, Li says any attempts to keep BYD and other Chinese carmakers out of the country are unnecessary, because none have plans to go there anyway. The official line is that, given the volatile relationship between the US and China, a US push is off the table. But there are hints of a longer term strategy at play.

Lancaster, California, lies about 70 miles north of Los Angeles, near Edwards Air Force Base and west of the Mojave Desert. After the 2008 housing crash, R. Rex Parris, the mayor of the flat, arid city of about 170,000, went to China in search of cleantech investment to jump-start job growth. Li answered his call.

Although Parris is a Republican, BYD’s electric bus factory built in 2013 is tailor-made to appeal to California’s liberal values. BYD says the 550,000-square-foot plant helps cities across the US clean up their air while creating good, unionized jobs for Californians. It signed a community benefits agreement to give hiring preference to veterans, single parents and the formerly incarcerated. Stanford University is a customer, as is the city of Los Angeles.

Li has spent two decades in California cultivating a reputation as a key partner in the fight against climate change. Former Governor Jerry Brown hailed the factory’s opening on a 2013 trip to China, and BYD has spent more than $1.7 million since 2014 lobbying state officials on clean-air rules, gas taxes and state-funded vouchers for zero-emission trucks and buses. Li herself has also donated to local politicians, including $50,000 to the campaigns of Governor Gavin Newsom. This year, BYD was awarded a $30 million grant from the state to expand the Lancaster facility to make electric school buses.

Around 2010, Li joined the advisory board of the Institute for Transportation Studies at the University of California at Davis, which researches sustainable transportation and policy around the world. At the time, its founder and director, Dan Sperling, was also a member of the California Air Resources Board, the regulatory body that sets zero-emission vehicle policy for the state. BYD had been donating to ITS for several years, but in 2013, money at the business was tight, so Li wrote a personal check for $20,000 to maintain BYD’s sponsorship commitment, Sperling recalls. She gave him and his colleagues a personal tour of the Lancaster bus factory and was happy to help open doors for their research in China. “From a policy perspective, it was a way of networking, making connections, learning about how California politics and policy really worked,” Sperling says. “I think she was really committed to doing good—but within the confines of BYD.”

Li’s considerable charm, finesse and financial support haven’t been enough to shield BYD from rising anti-China sentiment in the rest of the country. In 2019, BYD faced a hostile lobbying push in Washington from American companies wary of competing against it in the bus market. The attacks were part of a campaign to persuade lawmakers to cut BYD and other Chinese companies out of the procurement process for federally funded transit projects, and it worked. A few months after the legislative battle, AAM, the US manufacturing lobby group and one of the leaders of the campaign, accused BYD of profiting from forced Uyghur labor in China and asserted in blogs and communications on its website that BYD is “controlled by the Chinese state.”

So Li enlisted Charles Harder, a celebrity libel lawyer in Los Angeles most famous for representing Hulk Hogan in his battle against gossip site Gawker Media and Trump during the Stormy Daniels defamation case. The suit said BYD lost “hundreds of millions of dollars” in lost or canceled contracts because AAM published “false and defamatory statements” about the “large, successful private company backed by Warren Buffett” that doesn’t use forced labor and is “not under the control of the Chinese government.” Harder took the case all the way to the Supreme Court, which rejected his petition in 2022. (BYD says the defamation lawsuit was unrelated to the lobbying fight.)

But Li hasn’t given up on overcoming obstacles in the US. In a 2022 letter to customers, BYD laid out plans to spin off its US bus business to become “a majority American-owned business” with the eventual goal of going public in the US. Despite completing the spinoff and rebranding as RIDE, the company is still getting a frosty reception in Congress.

Things in Europe aren’t looking much better. Sales in the EU, the world’s third-biggest car market and a huge profit opportunity given BYD’s low-cost base, got off to a sluggish start this year after the German government scrapped EV subsidies. But when BYD encounters political obstacles, it’s quick to get creative, at times with an assist from the Chinese government. In July, exactly one day after the EU slapped a provisional tariff on Chinese EV imports, news broke that BYD would build a $1 billion plant in western Turkey, which has a customs-union agreement with the EU that would make BYD cars built there exempt. Turkish President Recep Tayyip Erdoğan, having met with China’s President Xi earlier that week, had initially walked back plans to impose a 40% tariff on Chinese car imports and blessed the project. The tariffs remain in place, but the Chinese government has urged that the duties be removed. When asked, Li says she “couldn’t remember” whether the Turkey investment was part of the deal between the China-Turkey trade agreement. “We are not pushed by the tariffs,” she says. “We don’t care about the so-called long-term exports. We are working on localization.”

Li has spent lavishly to raise BYD’s profile in Europe, where the brand now has flagship stores in London’s Mayfair district, the Piazza del Duomo in Milan and the Centre Pompidou in the heart of Paris. This past summer, BYD was a major sponsor of Euro 2024, Europe’s soccer championship, a monthlong extravaganza that attracted some 320 million viewers around the world for the final. But the company sold only 23,787 vehicles in the first eight months of the year, according to Jato Dynamics, about 1% of European car sales. That’s much improved from last year but modest compared with growth in emerging markets such as Thailand and Brazil.

Although BYD is stymied in the US, Li is positioning BYD well geographically should there be a policy change, or to at least give American drivers serious FOMO. In July, as Canada weighed tariffs to match the 100% US duty on Chinese EV imports, Li announced a partnership with Uber Technologies Inc. The two companies will offer financing on 100,000 BYD cars to ride-share drivers around the world, including Europe, Latin America and, notably, Canada. Canada made good on its tariff threat in August, matching the US duty on Chinese EVs, and BYD insists it has no intention to enter the Canadian retail car market.

BYD’s actions in Mexico and Canada, which form a trade bloc with the US, suggest a more aggressive strategy than BYD lets on, says Flavio Volpe, head of Canada’s Automotive Parts Manufacturers’ Association and a vocal proponent of tariffs on Chinese imports. “Anybody that says they don’t have designs on the US market” is lying, he says. “There’s no point in crossing an ocean to try to sell into a 2 million car market, when the 17 million car market is an hour away.”

BYD’s ability to enter the US could depend on who wins the US presidential election in November. The Biden administration has taken a hard line against Chinese EVs entering the US, a largely bipartisan stance, but Trump has repeatedly stated he’s open to having Chinese automakers build plants with American workers in the US. If not, Trump said, he’d slap a 200% tariff on any Chinese cars trying to come through Mexico. (The Trump campaign declined to comment on the issue.)

Inviting BYD into the US market now could be catastrophic for Detroit automakers. At the moment, they can’t match the price or the technology packed inside, and it’s unclear when or how they will. They’re taking their first, tentative steps toward fully electric cars, and protectionism will buy them some time. But auto CEOs around the world have been disabused of the notion that BYD’s low prices can simply be attributed to subsidies. Even Musk, who scoffed at BYD cars in the past, has stopped laughing. In 2023, UBS AG did a teardown of the BYD Seal sedan, a challenger to the Tesla Model 3, and found that about 75% of the parts were made in-house, giving BYD a 25% cost advantage over American and European carmakers.

Both Ford and GM have recruited executives from Tesla and Apple to improve their EV and software capabilities. European carmakers Volkswagen and Stellantis NV are working with Chinese rivals to try to learn from them, trading cash or market access in return. Anything can happen, but nothing short of swift, wholesale transformation is needed to ensure the staying power of legacy car companies, says Mark Wakefield, global automotive market lead at consulting firm AlixPartners. “The winner today isn’t inevitable,” he says.

In the meantime, BYD keeps surprising. Last year it introduced its first supercar, an all-electric coupe called the Yangwang U9. Starting at about $238,000, with four independent electric motors, a thick carbon fiber rear spoiler and gull wing doors, the car pranced and hopped on stage at a car show in Shanghai last spring to flaunt a first-of-its-kind suspension system. It’s the type of over-the-top flash that plays well in China—and probably in the US, too. “Here in America, where you’ve got the biggest pushback for EVs and China as a whole because of the political stance, 1 in 5 still say, ‘Yeah, if you had a Chinese vehicle for sale, I’d love to come check it out,’ ” says Alexander Edwards, president of research firm Strategic Vision Inc., who’s surveyed car shoppers in the US and China. “That’s a good starting point.”

Written by: Gabrielle Coppola and Danny Lee — With assistance from Chunying Zhang, Mark Gurman, Leonardo Lara, Kelsey Butler, Patpicha Tanakasempipat, Allen K Wan, Ken Parks, Nicholas Takahashi, Annie Lee, Colum Murphy, Linda Lew, Ying Tian, and Keith Naughton @Bloomberg

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