Chinese electric vehicle brands are reshaping the competitive landscape in the European market.

On September 25, data released by the European Automobile Manufacturers' Association (ACEA) showed that in the broader European market, which includes the EU, UK, and European Free Trade Association (EFTA), BYD Co., Ltd.'s sales surged 201.3% year-on-year in August, capturing a 1.3% market share.

In contrast, Tesla Motors experienced a significant setback with sales plummeting 36.6% year-on-year, causing its market share to shrink from 2.0% a year ago to 1.2%. This decline enabled BYD Co., Ltd. to lead Tesla Motors in sales for two consecutive months.

The strong rise of Chinese brands is not an isolated case. Data shows that SAIC Group (owner of the MG brand) also achieved robust growth of 59.4% in August sales, bringing its year-to-date market share to 1.9% and ranking tenth among the region's best-selling brands.

By comparison, traditional European automotive giants showed more modest performance. Volkswagen and Renault recorded year-on-year sales increases of 4.8% and 7.8% respectively, while Stellantis Group achieved 2.2% growth, marking its first return to sales growth since February 2024.

Overall, the EU automotive market performed strongly in August with 5.3% sales growth.

**BYD Plans European Battery Factory, Accelerating Local Production**

The rapid sales growth is driving BYD Co., Ltd. to accelerate its localization strategy in Europe. On September 24, BYD's European Special Advisor Alfredo Altavilla stated at an automotive industry conference in Milan that as vehicle production expands in the coming years, BYD Co., Ltd. will need to produce automotive batteries in Europe.

He emphasized: "It makes no sense to invest in vehicle assembly in Europe while shipping batteries from China."

Currently, BYD Co., Ltd. is working full speed on launching production at its Hungarian factory, which is expected to begin production by the end of this year. Another facility in Turkey is planned to start production in 2026, with both factories having a combined designed annual capacity of approximately 500,000 vehicles. Alfredo Altavilla revealed that BYD Co., Ltd. is still evaluating whether to prioritize building a third vehicle assembly plant or a battery factory, and is engaging with local authorities across European countries, with energy costs being one of the most important competitive factors in site selection.

**Plug-in Hybrids Prove Key**

BYD's success in Europe is largely attributed to its strategic product approach. BYD Co., Ltd. initially sold only battery electric vehicles (BEVs) in Europe but subsequently introduced plug-in hybrid electric vehicles (PHEVs), which quickly gained consumer acceptance.

This strategy offers multiple advantages. For automakers, PHEVs typically provide better cost structure and profitability than pure electric vehicles while meeting increasingly stringent emission standards. This approach also helps reduce tariff impact.

BYD Co., Ltd. Executive Vice President Li Ke stated earlier this month that plug-in hybrid models are expected to dominate the group's European sales in the short term. Overall market data confirms the electrification trend, with battery electric, hybrid, and plug-in hybrid vehicle registrations collectively accounting for 62.2% of the EU market total in August, significantly higher than 52.8% in the same period last year.