Why winning the UK matters for BYD
Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
BYD has done it again: outselling Tesla globally for 2025. But even now, critics dismiss its rise as a China-only story, crediting its success to its vast home market and generous subsidies. But that argument will not hold much longer.
The Chinese electric vehicle maker’s sales growth in its home market, long considered a core growth driver, is now slowing. Total sales fell 18.3 per cent in December as price competition intensified and rivals narrowed the technological gap. Full-year sales growth slowed to 7.7 per cent. The stock market is already reflecting that outlook. BYD shares have fallen a quarter from its May peak and trade at 17 times forward earnings, compared with Tesla’s valuation of over 200 times earnings, reflecting expectations beyond car sales.
But while growth in China has cooled, BYD’s overseas sales have surged, rising more than 150 per cent last year to over 1mn vehicles. Europe has been at the centre of that expansion, with BYD increasingly outpacing Tesla in several markets, most notably the UK.
The UK is a small EV market in absolute global volume terms, with a few hundred thousand battery electric registrations a year against China’s millions. Even BYD’s sixfold surge in sales here last year and its rise to become the UK’s sixth biggest carmaker in December cannot explain why it delivered 620,000 more EVs globally than Tesla last year.
Yet the UK’s importance lies in being a diagnostic market for carmakers. It has no politically protected mass-market domestic manufacturer, high price transparency and a fleet dominated buying structure. Electric car demand has been growing rapidly in recent months with EV sales reaching a record 473,000 units last year, or 23.4 per cent of the overall market, according to the Society of Motor Manufacturers and Traders. Around half of all new cars are bought by fleets which care most about residual values and depreciation risk.
In recent years, Tesla’s UK models have suffered residual value declines faster than comparable EVs. Average used values for Tesla’s Models Y, X, 3 and S in the UK are reported to have fallen by about a third between May 2023 and April 2025. Tesla’s experiment with dramatic price cuts has helped it support retail demand but it has also destabilised residual value assumptions that leasing firms base their buying decisions on. For fleet buyers, depreciation in EVs is unavoidable, which means BYD’s lower initial pricing combined with more stable product and pricing cycles in Europe carries less downside risk.
That is why the UK matters disproportionately for BYD. Asia, where fleet decisions are shaped by country-specific national regulations, offers no comparable single market where local success converts into regional advantage. But in Europe, leasing companies operate across borders so a fleet decision made in one country often shapes purchases elsewhere. The UK is home to several of Europe’s largest fleet management companies. Success here does not guarantee acceptance in other European markets, but it lowers internal approval hurdles across the region.
New car registrations in Europe are at around 11mn cars a year and about 60 per cent of them are fleet purchases. Around a fifth of those fleet registrations are now electric, implying an addressable fleet EV market of around 1.2mn vehicles annually. Even if BYD targets just a 5 per cent fleet share, that would be over 60,000 cars in new sales a year before any retail sales.
The way BYD is gaining ground in the UK follows a familiar historical pattern. Like Japanese carmakers before them, BYD is entering through fleets, taxis and compact cars. These are segments where cost matters more than brand history. What is new is the pace: a transition that took Japanese carmakers two decades has taken BYD less than three years.
BYD still faces the risk of further tariffs, localisation demands and political resistance in Europe, while Tesla remains profitable and very much capable of adjustment. Winning the UK market also will not fully offset BYD’s slowing sales in the Chinese market overnight.
Yet the direction of travel has now changed. For much of the past decade, Tesla was taken as proof that making cars was no longer an industrial business but one driven by software and narrative. BYD’s success in selling cars to buyers who care little about storytelling suggests the opposite.
