While Tesla has dominated Europe’s electric vehicle market for years, Chinese automaker BYD is mounting an aggressive challenge with plans to open 100 sales locations across Germany by 2026.
The expansion marks BYD’s push to increase brand awareness and acceptance among European customers. Germany isn’t just about sales sites though. The company’s considering building its third European manufacturing plant there, though high labor costs and low productivity have sparked internal debates about the decision. BYD will announce its choice within the next year and a half.
BYD’s European manufacturing network is taking shape quickly. The company’s investing over $4 billion in a Hungarian plant that’ll produce 200,000 to 300,000 vehicles yearly. Originally set to open in October 2025, it’s now delayed until 2026. Turkey’s getting a plant too, expected to start operations by late 2026 with 150,000 annual capacity. Together, these facilities will produce 500,000 vehicles each year.
BYD’s investing $4 billion in European manufacturing to produce 500,000 vehicles annually by 2026.
The Hungarian plant will first build the Dolphin Surf compact EV, starting at €21,870 with range options between 220 and 322 kilometers. BYD’s also bringing its luxury Denza brand to Europe by late 2025, including the Z9GT shooting brake that delivers up to 952 horsepower. The Z9GT was designed by Wolfgang Egger, former Audi and Lamborghini chief designer.
Politics are shaping BYD’s investment decisions. The Chinese government told manufacturers to avoid countries that supported EU tariffs on Chinese EVs. Germany voted against these tariffs, keeping it in the running for BYD’s investments. France and Italy weren’t so lucky—their support for tariffs eliminated them from consideration.
BYD’s European sales are expected to double to 186,000 vehicles in 2025. The company’s targeting 400,000 sales by 2029 once its full lineup arrives. This growth’s part of BYD’s bigger goal to make half its sales overseas by 2030.
The company’s already overtaken Volkswagen as China’s largest automaker. Building cars in Europe helps BYD avoid tariffs and shipping costs from China while competing better with European manufacturers. The company also plans to manufacture batteries in Europe to further reduce import duties and special tariffs, though the specific location and timing remain under discussion.
With established operations including a Hungarian headquarters opened earlier in 2025 and an electric bus factory running since 2016, BYD’s positioning itself as Tesla’s biggest challenger in Europe’s rapidly growing EV market.