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The failure of BYD, China’s best-selling brand, to quickly gain market share in Europe has led to an internal debate about which products, brands and even which powertrains to launch here, according to people briefed on the topic by BYD at its headquarters in Shenzhen, China.BYD last year sold 3 million cars globally, making it the world’s 10th-largest automaker, behind Suzuki. The company was the world’s No. 2 seller of full-electric cars, just behind Tesla.

But in Europe, BYD ranks a distant third among Chinese automakers, trailing Geely Group’s diverse portfolio of brands that includes Volvo, Polestar, Lynk & CO and Lotus, and the surging MG brand, which is owned by SAIC.

The debate over BYD’s future models comes at a crucial time for the company.

BYD’s first dedicated car carrier left China for ports in the Netherlands and Germany on Jan. 16 with 5,500 vehicles on board – a number that equals more than one-third of the automaker’s European sales in 2023. BYD said in December that it plans to open a factory in Hungary to help it achieve a top five market share in Europe in the medium term.

BYD is one of the few automakers still keeping a high profile at auto shows in Europe, with the European debut of the U8 luxury large SUV expected at the Geneva auto show on Feb. 26.

Chinese companies are also facing a European Commission investigation into Beijing’s support for the EV value chain, which could result in punitive tariffs that erode any price advantage. Already, the French government has made Chinese-made vehicles ineligible for incentives.

BYD declined to comment on future model strategy.

BYD is not a newcomer to Europe, having started sales in late 2021 with a single model in Norway. It now sells five models in eight of the largest European markets, including Germany, the U.K., France and Italy, but its share is just 0.1 percent on 2023 sales of 15,588 units, according to figures from Dataforce market researchers.

The company's best-selling model in Europe was the Atto 3, with 12,318 sales, making it the region's best-selling full-electric compact SUV -- in a segment that has yet to draw the full attention of Europe’s big legacy automakers.

Globally, plug-in hybrids are a significant part of BYD’s success, with about 1.4 million sold in 2023, nearly all in China. But in Europe, the technology is seen as a transitional solution to full electrification, with only Italy still offering significant incentives for plug-in hybrids.

Last year, plug-in hybrid volume in Europe declined by 2.8 percent to 993,000 units, in an overall market that grew by 14 percent to 12.9 million units. Conversely, full-electric cars grew by 28 percent to 2.02 million units, figures from Dataforce show.

BYD is also moving into lower-priced segments with the Dolphin, a compact full-electric hatchback that undercuts most, but not all, of its rivals on price. The Dolphin’s European rollout this year comes amid a wave of price cuts by Volkswagen and other brands. BYD in January dropped the prices for the Atto 3, the Seal midsize sedan and Dolphin by 5 to 15 percent, according to reports.

MG finds success

Besides taking on well-established European brands on their home turf, BYD faces competition from Chinese automakers Geely and SAIC.

Geely was China's largest group by volume in Europe in 2023, ranking 10th with 348,000 sales, according to figures from Dataforce, just behind Tesla. Geely's Swedish brand Volvo accounted for 287,000 of that volume.

SAIC's MG Motor sold 231,322 cars in Europe last year, ranking 11th after Geely. MG has doubled volumes for three years in a row, with sales in 2023 driven by the ZS small SUV and the MG4 compact full-electric hatchback.

The success of MG in particular has presented a dilemma for BYD. MG has come to Europe with a range of lower-cost cars and a lineup that include BEVs and combustion engine models. About 53 percent of MG sales last year were of combustion-powered cars (including 5 percent plug-in hybrids), while 47 percent were BEVs.

BYD, in contrast, has largely focused on more expensive cars and sells only full-electric vehicles. Only recently has BYD decided to launch a plug-in hybrid in Europe, the Seal U SUV. It will be the first in a range of plug-in hybrids, BYD has said.

Picking the right brands

If the powertrain issue has been largely settled -- starting with a Seal U plug-in variant, to be potentially followed by plug-in versions of the U8 large SUV and Bao 5 large SUV -- the next question is which brands BYD should sell in Europe?

In China, there are four BYD brands: YangWang, Fang Cheng Bao, Denza and the namesake BYD brand (which has two model families, Dynasty and Ocean).

BYD plans to bring the Denza brand to Europe, starting in Germany at the end of the year. Mercedes-Benz owns a 10 percent stake in Denza, which showed the D9 minivan at the 2023 IAA Mobility auto show in Munich.

BYD is still evaluating what to do with the rest of its brand stable, according to people familiar with the matter:

• The first potential strategy is the simplest: All models imported to Europe will carry the BYD brand, similar to what SAIC is doing with MG. The advantage is that investments already made to nurture BYD’s brand recognition in Europe will continue to pay off, and future marketing investments can be consolidated. A downside is that a one-brand-fits-all strategy prevents wider pricing segmentation with a variety of brands, as Geely has in Europe, and potentially caps growth and profits.
• A second option is to keep the BYD name as an umbrella above a range of brands, similar to what Geely does globally with Volvo, Polestar and its other brands.

More Chinese rivals target Europe

Even as BYD debates its future path in Europe, more of China's automakers are targeting the region. This comes as Europeans increasingly switch to battery-electric cars where Chinese automakers think they have advantages over European brands in technology and pricing.

Chery, China's fourth-largest automaker, will launch three models for each of three brands in Europe within the next two years, although it will not sell under them under Chery brand. The Omoda and Jaecoo brands are set to start sales in Europe this year, with the luxury Exlantix brand following in 2025.

Great Wall Motors, which has sold cars in Europe with little impact so far, is fine-tuning its brand strategy. It said last year that it would sell cars with the company name shortened to GWM, followed by the names of subbrands -- Ora and Wey -- followed by the model designation. Previously, Ora and Wey were separate brands.

BYD’s higher-priced European models have been slow to catch on, with the Tang midsize SUV (starting at about 70,000 euros in Germany) accounting for just 1,054 sales in 2023, and the similarly priced Han midsize sedan selling 849 units, according to Dataforce. BYD has not announced whether it will sell its cheapest model in China, the Seagull small EV, in Europe.

In Europe, the U8, would give BYD a rival to the Mercedes-Benz G-Class and Range Rover. The SUV costs about 140,000 euros in China and is powered by an electrified drivetrain with a 49-kilowatt-hour battery and a gasoline range-extending engine, for a total range of about 1,000 km (620 miles.) It was shown at the Tokyo auto show in October, but branded as a YangWang model, as it is in China.

A similar branding decision could come soon for the Fang Cheng Bao Bao 5, a ruggedly styled SUV that BYD is considering exporting to Europe, according to Automotive News Europe sister publication Automobilwoche.

The Bao 5 is a midsize SUV equipped with a plug-in hybrid drivetrain. In Europe, it could start at around 40,000 euros ($43,500), making it competitive with segment leaders such as the VW ID4, Skoda Kodiaq and Toyota RAV4, as well as Europe’s best-selling model overall, the Tesla Model Y. Its boxy styling could also make it a rival to the significantly more expensive Range Rover, Defender and Toyota Land Cruiser.