Drive 100 miles south, from Hungary’s capital, Budapest, and you’ll arrive at a vast industrial site where half-constructed factory buildings stretch over more than a square mile of former wheat fields. There, on a searing hot morning outside the town of Szeged, a worker toiling alongside cranes and earthmovers hauls a cracked pot out of the ground, and holds it up in the blistering sun. “This is thousands of years old!” he exclaims, explaining that it probably dates to the Roman Empire, which once ruled these parts.
Now another great power—China—is putting down stakes here in the heart of Europe. By year’s end, the first electric vehicles will roll out of a factory on this site, courtesy of Chinese EV maker BYD Auto—the biggest seller of battery-powered cars in the world, and increasingly the one legacy automakers most fear.
Beginning in 2026, this plant will produce about 150,000 compact all-electric sedans a year, ideal for Europe’s narrow streets; production is expected to rise to 300,000 cars a year by 2030. If BYD’s intentions weren’t clear enough, a blizzard of billboards and television ads across the continent features the slogan “Made in Europe, for Europe.” More 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 industry that was virtually created by—and until very recently dominated by—a much more familiar name: Tesla.
Call this Elon Musk’s worst nightmare, come to life in concrete and steel. By some metrics, Tesla stillhas swagger: Its valuation of around $1 trillion is seven times as high as BYD’s—higher, indeed, than any other automaker’s. Tesla remains the leading EV brand in the U.S., where Chinese manufacturers are effectively blocked by tariffs of more than 100%. But globally, BYD is racing ahead of its competitors. And its success is an equally bad-dream-come-true for older Fortune Global 500 car giants, like GM, Toyota, Ford, and Volkswagen, whose immense clout has for decades shaped the politics and economic prospects of the U.S. and Europe.
will eventually produce 300,000 cars a year.
PHOTOGRAPHS BY BALINT BARDI for Fortune
China produced more than 70% of all EVs last year, according to the International Energy Agency, while European manufacturers produced 14%, and Americans less than 10%. In the $4-trillion-plus global auto industry, the breakneck pace growth strategies of Chinese carmakers, led by BYD, have broken a dam. Volkswagen’s EV transition has finally gained traction; in July, it said its EV sales had nearly doubled year over year in the first half of 2025. But it’s losing market share to BYD nearly everywhere, especially in China. And VW and other European automakers are under siege at home: Chery, Xpeng, and Geely are among the Chinese companies scouting for European production sites, which could help them avoid tariffs.
Until recently, few imagined that BYD, or Build Your Dreams, to use its flowery full name, could crush age-old titans. But its trajectory in recent years has been startling: It sold 4.25 million cars last year—10 times the number in 2020—and aims to sell 5.5 million this year; most of its 2024 sales were plugin hybrids. Two new BYD factories in China will each have greater production capacity than the world’s biggest auto plant today, the Volkswagen complex in Wolfsburg, Germany. With revenues up 27% to $108 billion in 2024, BYD has catapulted up the Fortune Global 500 ranks.
Worldwide, Tesla sold 384,000 cars in the second quarter of this year—while BYD sold nearly 607,000 EVs in the same period. (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 sales have struggled everywhere, as more buyers appear to be turned off by Musk’s politics as well as Tesla’s high prices and limited selection of models. But the shift has been particularly noticeable in Europe, where BYD outsold Tesla for the first time in May.
“From the first electric car to the first 1 million cars, it took us 13 years,” Stella Li tells me when we meet in Vienna. Li, BYD’s executive vice president, heads its worldwide expansion and is the public face of BYD outside China. “Then, from 1 million to 3 million it took us 18 months,” she says. “Now we are adding 1 million cars every two months.”
The question is, can BYD sustain this breathless pace, and still thrive—even if the U.S. remains off-limits? The answer could emerge in Europe, where 450 million people live across dozens of countries, many of them wealthy economies. BYD sold nearly 55,000 cars in Europe between January and May. That’s a tiny 1% of the regional market—but triple its sales in the same period last year. And BYD can offer rock-bottom prices—subsidized by China’s government, say analysts—to gain market share.
“What they’re doing now is seducing the customer, and later they’ll think about the profits,” says Felipe Munoz, an Italy-based analyst for automotive intelligence firm JATO Dynamics. On a trip to his nativeColombia this year, Munoz was stunned to see roads filled with BYD cars, once a rare sight. He believes Europe could soon look the same. “If they keep growing at this speed,” he says, “Europe should expect big disruption in the coming months.
On a sparkling July morning, I am cruising down the Champs-Élysées, the sun peeking through the tall plane trees. For a moment I can almost glimpse the future Munoz envisions: Europe’s most famous avenue, jammed with BYDs. I have briefly borrowed a Dolphin Surf from a BYD showroom two blocks away, where it sells for less than €20,000 ($23,200), barely half the price of Tesla’s Model 3. Just as I am contemplating the joys of free parking near the Arc de Triomphe—compact EVs park for free in Paris—a sleek black BYD Seal, a plug-in hybrid costing about €47,000, slides into the next lane.
To gain a global foothold, BYD has taken a path drastically different from that of other automakers. It was founded in 1995 as a battery company—a move that now looks brilliantly prescient—by Wang Chuanfu. Wang, an engineer orphaned in his teens, borrowed money from his cousin to launch the company. BYD had some success selling lithium-ion batteries to consumer electronics manufacturers—including in the U.S., where Stella Li, then a statistician at BYD, once spent months wooing cell phone maker Motorola.
Andy Wong—AP Photo
But Wang reinvented BYD in 2003 when he purchased a failing Chinese state-run carmaker, having concluded that his batteries could more easily transform the auto industry than the tech world. That move, in turn, attracted a transformative investor: Warren Buffett, who plowed $232 million into BYD in 2008, through Berkshire Hathaway, for a 10% stake, effectively enabling it to become a competitive automaker.
Early vehicles were deemed clunky and ugly: “Have you seen their cars?” Elon Musk chuckled in2011, when asked whether BYD worried him. But Buffett’s stamp of approval helped lure more capital,and continues even today to help BYD open doors. “A couple of years ago no one in Europe, and certainly not in America, had heard of this Chinese company BYD,” says Sándor Nagy, deputy mayor of Szeged. “But Warren Buffett: They have heard of him.”
In this corner of Hungary, BYD’s disruption is well underway. Hungarian far-right Prime MinisterViktor Orbán—a close ally of President Trump—has spent years luring Chinese investors. In May, Li flew to the country with Wang to announce that BYD’s European headquarters would soon open in Budapest and include a research center with 2,000 engineers.
Akos Stiller—Bloomberg/Getty Images
The Hungarian venture is a departure for BYD. For decades, its strategy has centered around tight control of its supply chain, including the most valuable parts of all EVs: batteries, powertrain electronics, and driver assistance systems. The company makes about 16.4% of the world’s EV batteries. It also produces its own semiconductors, has stakes in mining companies for batteries’ raw materials, and even exports cars on its own freighters. In 2023, the Swiss bank UBS concluded that the company’s tight vertical integration gave it at least a 25% cost advantage over automaker rivals.
BYD’s presence could transform Szeged, a quiet university town of 200,000 people. The company has said its factory will hire up to 4,000 workers, perhaps rising to 10,000. But BYD stands to gain far more than the host city. By producing within Europe, it avoids tariffs of about 17.5%, imposed last year after the E.U. accused Chinese automakers of undercutting competition through state subsidies. (Analysts at Germany’s Kiel Institute for the World Economy estimate BYD received about €3.4 billion, or about $3.76 billion, in subsidies between 2018 and 2022.)
Many analysts caution that this rate of expansion won’t be sustainable for BYD and other Chinese EV makers. So far, it has entailed mounting debt and a willingness to forgo profits, and snags have ensued. Suppliers have reported BYD taking many months to pay their bills, and in July, the Wall Street Journal said BYD had billions in unexplained “external current account” charges on its balance sheet. BYD reports total debt of about $5.67 billion, but analysts told the Journal the company’s debts to suppliers had risen to $54 billion over the past five years. (BYD says its financial details are fully disclosed in quarterly audited reports.)
Complicating matters, Chinese automakers are engaged in a gloves-off battle to grab slices of the rocketing EV market by slashing prices. BYD sells its wildly popular Seagull hatchback, called the Dolphin Surf in Europe, for under $8,000 in China. “The brutal price war in China’s auto industry is obliterating profitability,” S&P Global Ratings warned in June.
BYD and others do not seem to care, at least for now. Chinese automakers launch new models attwice the rate of Western rivals and at half the investment cost, according to New York–based consultancy AlixPartners. Since 2020, when Tesla unveiled the Model Y, BYD has launched about 40 new vehicles.
“Chinese automakers prioritize time to market above all else,” says Stephen Dyer, head of AlixPartners’ Asian auto industry team. Their playbook is not Detroit or Germany: It is Silicon Valley. “They have to keep products fresh,” he says; a Chinese EV “is much more like a smartphone.
A diminutive woman with almost frenetic energy, Stella Li has emerged as BYD’s crucial ambassador and strategist, with titles including CEO of BYD Americas and Europe. Li zips across the globe furiously, rarely making it back to her current home in Los Angeles, she says. The day I meet her in Vienna, she has flown in from Istanbul and will sleep that night in Germany.
Europe is crucial to BYD’s global push, Li says: “If we can be successful here, we can be successful in any other country.” Li has come to Vienna to ink a supply deal for the Szeged plant with Austrian steel manufacturer Voestalpine. The signing ceremony takes place on a rooftop in the museum quarter, with a sweeping view of the area’s ornate domed buildings.
For Li, it’s also an occasion to tout BYD to a select audience of steel executives and Chinese diplomats. A blur of motion in a pastel-blue pantsuit, she bounces about in thick-soled white sneakers, her arms darting around, while a wall-size screen behind her shows a series of BYD statistics.
In a rapid-fire cadence, she says BYD will add a sales presence in 12 more European countries this year, totaling 1,000 stores. The company has just rolled out its one-millionth Seagull, and in February, it launched its God’s Eye driver-assistance software, which it plans to bring to Europe. Perhaps most crucially, its new flash-charging technology can take drivers 670 miles on a single charge, with 250 miles of drive time for every five minutes of recharge—as fast as pumping gas. “It means we can drive from here to Rome without stopping!” Li gushes, while a map of Europe flashes on the screen.
When we sit down together, I ask Li whether she feels vindicated by BYD’s growth. She says the company was long underrated as a battery manufacturer, and that was one reason Wang pivoted to making cars. “We were too small,” she says. “Nobody looked at us.”
Those days are gone. In recent months, BYD has hired several executives from European automakers like Stellantis. The vehicles whose designs Musk once mocked are now crafted by engineers whom BYD has lured away from Audi and Alfa Romeo. Musk is no longer laughing: In 2023, he called BYD cars “highly competitive”—a remark that proved an understatement.
In Europe, Li says, the company will build sales partly by tapping the talent and networks that have defined the region’s industry for a century— beating its rivals, in a sense, by co-opting them. “European companies have a legacy; they have a lot of traditions,” she says, admiringly. “The only part they are too much behind on is EVs and plug-in hybrids. In China, we put all our money, all our R&D expenses, into that.” That decision is clearly paying off—and could forever rewrite the history of a critical industry.
This article appears in the August/September 2025 issue of Fortune with the headline “BYD beat Tesla. Now it’s in the driver’s seat.”
