BYD Is Speedrunning Its Takeover Of Europe

China’s largest electric automaker has been slowing down a bit at home. The market is crowded and EV manufacturers are tripping over one another in a seemingly never-ending price war. But these days, BYD has its eyes set on something bigger—something harder to achieve.

The rising star wants to take over the world, and that starts with one of the most important targets: Europe. Let’s dig into how things are going on that front. 

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Welcome back to Critical Materials, your daily roundup for all things electric and tech in the automotive space. Also on deck: Tesla kicks made-in-China parts to the curb and Germany warns its automakers about falling victim to the sunk cost fallacy in China. Let’s jump in.

30%: BYD Aims To Double Sales Network In EU Next Year

Photo by: Andrei Nedelea

If you’ve been wondering whether or not BYD is really serious about Europe, the automaker is practically screaming from the top of the Alps to prove just how determined it is to take over one of auto manufacturing’s top hubs.

BYD Europe’s regional director confirmed the company’s on-track progress to hitting 1,000 “points of sale” in Europe by the end of this year. But that’s just the tip of the iceberg. By next year, it plans to at least double that figure. Automotive News reports:

BYD is planning to double it sales network in Europe by the end of next year as part of an aggressive push into the region’s market.

“By the end of 2025, we will be present with 1,000 points of sale in Europe, and next year we will double (that),” Maria Grazia Davino, BYD’s regional managing director for Europe, said at an event in Frankfurt.

“In line with successful competitors, we need to have proximity and win proximity to the European customers,” said Davino,who is in charge of BYD’s business in German-speaking countries, Eastern Europe and Scandinavia.

BYD is likely feeling pretty proud of itself right now. It sold a whopping 120,000 cars in Europe throughout Q3. That might not seem like much compared to other major brands, but keep in mind that BYD sold just under 30,000 over the same time period last year. Being up 400% year-over-year is impressive.

The localization plan is the interesting part of BYD’s siege on Europe. Its first Western manufacturing plant is being set up in Hungary, with a second planned for Turkey and a third under consideration; Spain is currently a top contender. Needless to say, one factory is testing the waters. Two is a plan. Three? That could be a conquest in the making.

Its next tactic will be growing its dealer network. Localizing its brand means building a network of local suppliers, service capacity and regional partners. That’s how BYD will transition from becoming a fast-growing outsider to a European fixture.

60%: Tesla Kicks Chinese Parts To The Curb

Photo by: Tesla

Tesla has reportedly given marching orders to its supply partners, instructing them to ditch Chinese-made components if the parts are headed to the U.S.

According to new reports, Tesla has already been working to change its sourcing for parts that will be installed in U.S.-bound vehicles. The automaker is said to be aiming a complete exodus of made-in-China parts “in the next year or two” in order to ward off continued roller-coaster-like trade disputes between the U.S. and China. Here’s what Reuters has to say:

The Elon Musk-led automaker and its suppliers have already replaced some China-made components and aim to switch all other components to those made outside of China in the next year or two, the report said, citing people familiar with the situation.

Executives have struggled with fluctuating tariffs in the U.S.-China trade dispute, complicating pricing strategies, the Journal added.

Tesla has been increasing North American sourcing for its U.S. factories for two years amid tariff threats, Reuters reported in April.

The report comes just a week after General Motors gave its suppliers the same demand. But why the sudden anti-China pivot? Well, if for no other reason, the U.S. has established a stance on tariffs that reads about as predictable as a weather pattern. One minute, there’s a threat of new import duties, and the next, a complete reversal.

This has made it difficult for automakers to price out vehicle programs in the long term. It becomes more stable for brands to build at home—even if that means spending a bit more up front. After all, those prices ultimately get passed on to the buyers.

Tesla’s situation is especially awkward given how central China has been to building its global manufacturing presence. Shanghai has become something like an electrical hummingbird, pumping out EVs for the global market with enough profit margin to feed expansion and pad profits. But lately, sales of made-in-China models have cratered (at least in China).

The brand’s sales in China fell about 9.9% year-over-year, but that’s not the most important stat. Data shows that total output from Shanghai dropped a whopping 32.3% in September. That number includes the total vehicles made available for export, which speaks to the state of Tesla’s global sales.

90%: Germany Warns Automakers: Don’t Come Crying If China Investments Blow Up In Your Faces

Photo by: BMW

Germany has officially reached the stern parent phase of its relationship with its auto industry. The country’s Chancellor, Friedrich Merz, is watching as car makers turn on the stove and hover their hand above the burner—in this case, the stove is China’s over-stuffed car market. And the burner? The constant stream of cash that these companies continue to inject into it with reckless abandon.

It’s not just automakers, either. The problem spans across industries as corporate investing has jumped nearly 30% in 2024 and isn’t expected to let up any time soon. Merz has now issued a stern warning to the companies that might burn their hands on risky investments: “If things go wrong, please do not come to us.” Via Bloomberg:

Today, China is the most important market for BMW, Mercedes-Benz and Volkswagen Group.

BMW has committed about €3.8 billion to a battery project in Shenyang, making China the hub of its largest research and development network outside Germany. It also exports electric SUVs from China back to Europe. Meanwhile, Mercedes shifted its annual strategy summit to Beijing and is developing China-only electric vehicles.

VW, which calls China its “second home market,” has similarly signed a string of deals with Chinese companies to accelerate its technology development.

As if China’s already saturated automotive sector wasn’t evident enough to the rest of the world, the country’s biggest players in the legacy auto space continue to plug the sinking ship’s holes with wads of cash in hopes that it will stay afloat. Officials in Germany see the writing on the wall, though, and have cautioned companies that their bullheaded investments are extremely risky.

Merz warned that Chinese authorities have the power to shut off supplies entirely or lock German players out of the industry with little or no warning. To minimize this prospect, German officials are calling for companies to “de-risk” from China. Merz has now created a national security council to address the issue directly, but if the current laissez-faire attitude of the market is any indication, it’s going to take some serious regulatory pressure to make it happen (something that the industry doesn’t want).

“The auto industry is vigorously pursuing and implementing the necessary de-risking,” said a spokesperson for the German auto industry association, VDA. “But it must also be politically enabled, not merely demanded.”

100%: Car Companies Are Decoupling From China. What Happens Next?

Photo by: Patrick George

From the U.S. to Germany, automakers across the globe are feeling the pressure of China’s huge automotive presence. What started as a link in the supply chain quickly turned into an all-out war in its home market, which quickly squeezed out legacy global players.

If the Western auto industry truly does begin peeling away from China—whether that be by force, fear or tariff fatigue—the world could see just how expensive protectionism really is. What does your crystal ball predict? Are automakers and countries really pushing to domesticate their auto markets, and if they succeed, what happens next? Let me know your thoughts in the comments.