Chinese carmaker BYD officially overtook Tesla in electric vehicle sales in 2024. The company sold 4.3 million vehicles, achieving 41% annual growth and doubling profits in just two years. With features like massaging napa-leather seats, OLED rotating displays, 2,100 km range, and rapid charging Blade Batteries — at the price of a compact VW Golf — BYD’s offer seems unbeatable.
But behind the flash, mounting concerns are emerging: massive hidden debt, quality issues, and aggressive accounting. Analysts now wonder if BYD is the success story of the century, or the next Evergrande-style collapse.
A Model of Vertical Integration and State Ambition
Founded in 1995 by Wang Chuanfu with a loan from his cousin, BYD started as a battery manufacturer aiming to replicate Japanese tech for less. By the early 2000s, it was supplying Motorola and Nokia, then pivoted into automotive with the acquisition of Qinchuan Auto in 2003. At the time, the Chinese press mocked the idea of a battery maker entering the car market.
Five years later, Warren Buffett took notice. Convinced by Charlie Munger’s glowing opinion of Wang (“a mix of Edison and Jack Welch”), Berkshire Hathaway invested $230 million. BYD became a pioneer of extreme vertical integration. Unlike Tesla (which buys batteries from Panasonic) or VW (which uses hundreds of suppliers), BYD produces almost everything: batteries, semiconductors, motors, electronics, glass, lights — even its own lithium from Tibet and South America.
This allowed BYD to sidestep the global chip crisis in 2021 and capitalize on lithium price spikes, pushing production at an unprecedented rate. Its Shenzhen and Changsha factories can assemble one vehicle every 50 seconds, 24/7, with 85% automation. The Blade Battery, built in the dedicated Chongqing plant, is cheaper, safer, and already adopted by Ford and Toyota.
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International Breakthrough — and First Cracks
The international rollout has been strategic and aggressive. In Thailand, BYD now controls 40% of the EV market, building not just cars but an entire ecosystem: high-speed charging stations every 150 km, local technician training, and full-service customer care. In Norway, the Tang EV broke into the top 5. In Brazil, BYD is developing ethanol-electric hybrids, while in Israel, its batteries are tuned for extreme desert heat.
The company is also working with Uber (100,000 EVs ordered), Amazon, and Shell, who are installing BYD chargers across European fuel stations. Beyond vehicles, BYD is investing in urban rail (SkyRail), solar panels, and grid-scale battery storage.
But despite this impressive global momentum, quality concerns are growing. In 2024, over 96,000 Dolphin and Yuan Plus models were recalled due to steering column faults that risked short circuits and spontaneous fires — the largest recall in BYD’s history. Thousands of complaints followed the launch of the Sea Lion SUV, and online forums report issues like failing radios, incorrect GPS, weak 12V batteries, and defective wipers.
Exported models have shown paint peeling in the Netherlands, dashboard warping in Israel, and moldy interiors in Germany. A European importer claimed the cars often arrive 6 months late, in poor condition, and require on-site quality control.
Shaky Foundations: Accounting Tricks and Hidden Liabilities
A January 2025 report from GMT Research has drawn serious attention. The Hong Kong-based forensic accounting firm estimates BYD’s true debt at 323 billion yuan (approx. $44 billion), rather than the 42 billion officially declared.
The trick? Delayed supplier payments, averaging 275 days — effectively using suppliers as a free credit source. These aren’t reported as debt but function as such. GMT also notes that BYD’s payables are growing faster than revenue (+41% annually), a pattern eerily similar to Evergrande before its collapse.
The company denies the claims, citing 154.9 billion in cash reserves. But the question remains: if cash is abundant, why delay payments for 9 months?
Adding to the concerns: BYD is accused of inflating sales figures through a practice known as “0 km used cars” — registering new cars via shell companies or friendly leasing firms, then reselling them as used vehicles. Internally, sales teams report receiving orders to register 200–300 vehicles at month’s end to meet targets. Many of these cars remain parked for months, unsold.
Images and satellite views of huge parking lots filled with unsold vehicles have gone viral, prompting a Chinese government investigation launched in late 2024.
A Business Model Built on Subsidies
Between 2018 and 2022, BYD received $3.7 billion in direct subsidies — more than any automaker globally. In 2022, these represented 26% of its net profit. Aid takes many forms: consumer EV credits, free factory land, zero-interest loans, public fleet orders, and R&D tax breaks.
Economists in Beijing acknowledge that BYD’s current structure wouldn’t survive without state support. It is widely seen as a strategic national champion, not just a company.
The question is: what happens if subsidies stop? Already, when direct consumer incentives were cut in late 2024, BYD’s domestic sales began to slow.
A Global Offensive and Its Consequences
BYD’s average profit per car is $1,550, compared to $9,547 for Tesla. The gap is intentional. The strategy: sell below cost, flood the market, weaken rivals, then dominate pricing. In Thailand, this has already forced Mitsubishi to shut down its plant. Mazda and Honda have slashed output. One Hyundai executive bluntly said: “At these prices, we can’t compete. We either move to China or abandon the market.”
This pattern is repeating in Mexico, Brazil, and Indonesia. It’s the Amazon model, applied to manufacturing.
What Comes Next: Three Scenarios
- Collapse: Chinese subsidies dry up, the housing crisis deepens, and the $44 billion debt explodes. Suppliers collapse, production halts. BYD becomes the Lehman Brothers of EVs.
- Domination: The company addresses quality issues, maintains state support, and becomes the world’s leading automaker. Western brands are reduced to niche or subcontractor roles.
- Trade war: The US bans BYD (already in place). The EU imposes tariffs, launches anti-dumping investigations. BYD remains strong in China and parts of the Global South, but the West closes ranks.
More Than a Car Company: A Clash of Systems
BYD is no longer just about cars. It represents China’s industrial policy in action — one that combines long-term planning, state funding, and market aggression. The Made in China 2025 strategy aims to apply this model across industries: aviation, pharmaceuticals, semiconductors.
The US has already acted. BYD is effectively banned, citing national security risks. Europe, still divided between green goals and industrial survival, has yet to decide.
Whether BYD is the future of mobility or the next industrial bubble, it embodies a deeper shift: China no longer wants to be the factory — it wants to be the boardroom.
