What does BYD's overtaking of Tesla in the European market indicate?

Recently, the market landscape of new energy vehicles in Europe has witnessed a historic turning point - BYD surpassed Tesla's 6,253 units for the first time with sales of 11,123 units, achieving a comprehensive lead in core markets such as Germany, the United Kingdom, and France. This data not only marks a breakthrough for Chinese automakers in the high-end manufacturing sector, but also reflects the profound changes in the competition rules of the global new energy vehicle industry.

Byd's comeback in the European market began with its precise grasp of market demands. The starting price of its European version, Dolphin Surf, is only 19,990 euros (including subsidies), which is 55% lower than the price of Tesla Model 3, which is approximately 45,000 euros. This pricing strategy directly hits the demand of European consumers for products with high cost performance. Data shows that BYD's sales in the UK increased by 654% year-on-year, in the German market by 156%, and in the French market by more than 200%. In terms of product layout, BYD adopts a "dual-track" strategy: on the one hand, it covers the price range of 100,000 to 250,000 yuan with models such as Seagull and Yuan PLUS; on the other hand, it aims to enter the high-end market with the Han and Tang series. Its blade battery technology, the "Tian Shen Eye" advanced intelligent driving system that is standard across the entire series, and the intelligent driving version of new vehicles covering the price range of 70,000 to 200,000 yuan have all significantly enhanced the product's competitiveness. In contrast, Tesla, since the launch of Model Y in 2020, has not introduced new mainstream models for a long time, resulting in an aging product line and making it difficult to meet the demands of European consumers for vehicle model diversity.

Byd's victory is not solely attributed to its price advantage; its global supply chain and localized production strategy have also played a significant role. At present, BYD has set up factories in Brazil, Hungary, Thailand, Uzbekistan and other countries, and has significantly enhanced its global delivery capacity by forming roll-on/roll-off fleets such as "Pioneer One" and "Changzhou". In January 2025, BYD's overseas sales of passenger vehicles increased by 83.4% year-on-year to 66,300 units, setting a new monthly record. In the European market, BYD plans to invest 1 billion US dollars to build a new energy vehicle factory in Turkey and a passenger car factory in Hungary. This localization production strategy not only reduces tariff costs but also enhances the efficiency of product delivery. In contrast, the initial capacity utilization rate of Tesla's Berlin factory was insufficient. Coupled with the rising energy costs in Europe, the local production costs were higher than expected, making it difficult to flexibly reduce prices.

Tesla's failure in the European market is also closely related to its brand image and policy environment. In recent years, the controversial remarks made by Tesla CEO Elon Musk on social media and the controversy over the promotion of Tesla's self-driving technology have led to a decline in the trust of some European consumers in the brand. In addition, the EU has imposed tariffs on electric vehicles imported from China, increasing the operating costs of Chinese automakers such as BYD in the European market. However, BYD has successfully evaded tariff barriers and further enhanced the competitiveness of its products through localization strategies such as building factories in Turkey and establishing factories in Hungary. At the policy level, the subsidy policies for new energy vehicles in European countries have gradually been phased out. Tesla models, due to their high pricing, lost some of their subsidy eligibility and thus saw a decline in their competitiveness. For instance, in Germany, Tesla's sales in April decreased by 45.9% year-on-year, while BYD's sales increased by 156% year-on-year. This change in the policy environment has made high cost-performance models more advantageous in the European market.

Although BYD has achieved a phased victory in the European market, Tesla's technological strength still should not be underestimated. Tesla's $25,000 entry-level model under development and its capacity expansion plan at the Berlin factory may bring a turning point for it in the European market. However, BYD is also accelerating technological iteration. The "Tian Shen Eye" advanced intelligent driving system, which is standard across its entire range, has applied cutting-edge technologies such as lidar and high-performance chips to models priced at over 100,000 yuan, significantly enhancing the competitiveness of its products. In the future, competition in the European new energy vehicle market will become even more intense. With the continuous efforts of Chinese automakers such as BYD and NIO, as well as the accelerated transformation of traditional automakers like Volkswagen and Mercedes-Benz, the market will further differentiate. If Tesla wants to revitalize the European market, it needs to make adjustments in aspects such as model diversity, pricing strategy, and local production to cope with the increasingly fierce market competition.

Byd's comeback in the European market is not only a microcosm of the rise of China's new energy vehicle industry, but also a signal of the reconfiguration of the global industrial landscape. In this competition, technological innovation, cost control and market insight will be the keys to determining victory or defeat. For Tesla, how to maintain technological leadership while enhancing market adaptability will be the core proposition for whether it can revitalize the European market in the future.