Manufacturing Watch | How much closer is BYD to Toyota in the new energy era?

（Source: Hongtai Zhizao）

Zhizao Insights | How far is BYD from Toyota, the leader of the new energy era?

From follower to frontrunner, from the Chinese market to the global stage, BYD is writing a new story about an auto “king” in the new energy era. But compared with Toyota, which dominated the gasoline vehicle era for more than half a century, how far is this road to the throne still?

Introduction: A dialogue between two eras

In 2025, the global automotive industry’s power structure is undergoing a historic turning point.

With estimated annual sales of over 5.5 million vehicles, BYD not only retains the global crown for new energy vehicle sales, but also, for the first time, challenges the global dominance of traditional gasoline-vehicle giants. On the other side of the globe, Toyota still sits at No. 1 globally with sales of over 11 million vehicles, yet the share of pure electric vehicles in that number remains below 2%.

This is a highly symbolic contrast: the overlord of the gasoline vehicle era and the upstart of the new energy era are just brushing past each other at the intersection of history.

Wang Chuanfu has expressed his ambition on many occasions: BYD will become the global No. 1 around 2025. Akio Toyoda, meanwhile, has repeatedly emphasized that pure electric vehicles are only a transitional solution, while hydrogen fuel and hybrid power are the future. Two completely different technology routes, two completely different corporate philosophies—these are shaping the direction of the two eras.

This article will take an in-depth look at BYD and Toyota’s development paths, technological accumulation, and global strategies, aiming to answer one core question: how far is BYD from becoming the Toyota of the new energy era?

Part 1: BYD’s three-decade transformation—from a battery maker to a global giant

1.1 Early start: Built on batteries (1995-2003)

In 1995, Wang Chuanfu, 29 years old, founded BYD in a run-down workshop in Buji, Shenzhen. At that time, he was already an associate professor at the Beijing General Research Institute of Nonferrous Metals, yet he quit his secure job and went south to start a business.

At first, BYD was only a manufacturer of rechargeable batteries.

Back then, Japanese companies such as Sanyo, Sony, and Panasonic almost monopolized the global nickel-cadmium battery market. Faced with technological barriers, Wang Chuanfu created a production model of “semi-automation, half human operation”—replacing expensive automated equipment with cheap labor, cutting battery costs by 40% by force.

This “guns and butter” approach helped BYD become the world’s second-largest charger battery producer in just a few years. In 2000, BYD became a battery supplier to Motorola; in 2002, it became a supplier to Nokia. In the same year, BYD went public in Hong Kong. Wang Chuanfu held 27.83% of the shares, leaping to become a billionaire.

This experience forged BYD’s most core capabilities: vertical integration and cost control. When competitors relied on external suppliers, BYD chose to build its own production lines; when others purchased automated equipment, BYD designed and manufactured the equipment itself. This “if we can do it ourselves, we never outsource” gene would play a decisive role in the automotive business that followed.

1.2 Crossing into car-making: Staying the course amid controversy (2003-2009)

In 2003, BYD made a decision that shocked the industry: it acquired QinChuan Automobile and moved into the automotive sector.

When the news broke, the capital market voted with its feet—BYD’s share price plunged 21%, recording the largest one-day drop since its listing. Investors couldn’t understand it: a company making batteries—why build cars?

Wang Chuanfu’s response was simple: “I’m going to do cars for the rest of my life.”

In 2005, BYD launched its first self-developed model, F3. This knockoff Toyota Corolla-like vehicle was priced at only half of the original, yet quickly opened up the market thanks to its high cost performance. In 2009, F3 became the sales champion among passenger cars in China, and BYD thus emerged as a dark horse among domestic self-owned brands.

But Wang Chuanfu’s eyes never stayed on traditional gasoline vehicles. From the very first day it entered the auto industry, he believed that new energy vehicles were the future.

In 2006, BYD launched its first pure electric sedan, the F3e, with a range of 300 kilometers—becoming the world’s first mass-produced pure electric vehicle. In 2008, BYD launched the world’s first plug-in hybrid vehicle, the F3DM, and also received an investment from Berkshire Hathaway, which is under Warren Buffett—Buffett subscribed to 10% of BYD’s shares for HKD 1.8 billion; that investment later increased more than 30 times.

1.3 A decade of staying low: Technological accumulation and a long buildup to a breakthrough (2010-2019)

From 2009 to 2019 was BYD’s most difficult decade.

During those ten years, China’s new energy vehicle market underwent a long transformation from policy-driven to market-driven. BYD’s early products suffered from many criticisms: outdated exterior designs, low-end brand image, and unstable product quality. Although it won the sales championship for new energy vehicles for many consecutive years, it relied mainly on B-end markets such as taxis and ride-hailing services, and it was not highly recognized by consumers on the C end.

More importantly, in 2012, Tesla launched the Model S, redefining electric vehicles. This high-performance, forward-looking electric car quickly became the new favorite of the global elite class, making the “BYD vs. Tesla” comparison particularly glaring.

But precisely in this decade, BYD completed the most critical technological accumulation:

Blade battery (released in 2020): BYD’s lithium iron phosphate blade battery, which took more than a decade to develop, significantly improves volumetric energy density through structural innovation while maintaining the high safety of lithium iron phosphate materials. In needle-puncture tests, the blade battery does not catch fire or explode, and its surface temperature stays at only 30-60℃, whereas ternary lithium batteries ignite and burst into flames instantly, with temperatures exceeding 500℃. This technological breakthrough has completely reversed the market position of lithium iron phosphate batteries.

DM-i Super Hybrid (released in 2021): BYD’s fourth-generation hybrid technology, with an electricity-dominant hybrid architecture, has very low fuel consumption in charge-depleting mode of just 3.8L/100km, and a combined range of over 1,000 kilometers. More importantly, its cost has fallen below that of gasoline vehicles in the same segment, achieving “gas and electric at the same price.”

e-platform 3.0 (released in 2021): A pure-electric platform built specifically for pure electric vehicles, enabling a platformized and modularized full-vehicle body architecture, greatly reducing production costs and improving product performance.

CTB battery-in-body integration (released in 2022): Integrating the battery pack with the vehicle floor further improves space utilization and overall vehicle rigidity.

Yi Sifang and Yun Nian (released in 2023): Yi Sifang’s independent four-motor drive technology enables extreme functions such as pivot turning in place and emergency wading through water; the Yun Nian intelligent body control system enables active suspension adjustments. The release of these two technologies signals BYD’s breakthrough in high-end technology areas.

1.4 Explosive growth: From follower to frontrunner (2020-2025)

In 2020, BYD released its Blade battery and Han EV, and the brand image began to break upward.

In 2021, the release of DM-i Super Hybrid technology triggered BYD’s explosive sales growth. In that year, BYD’s new energy vehicle sales reached 590,000 units, up 231% year over year.

In 2022, BYD made a historic decision: it discontinued gasoline vehicles and fully transitioned to new energy vehicles. Starting in March, BYD became the world’s first traditional automaker to stop gasoline vehicle production. That year, BYD’s sales reached 1.86 million units, surpassing Tesla to become the global sales champion for new energy vehicles.

In 2023, BYD’s sales exceeded 3 million units, reaching 3.02 million, up 61.9% year over year.

In 2024, BYD’s sales reached 4.27 million units, up 41% year over year. It not only retained the global new energy vehicle sales crown, but also ranked among the top five in the global automaker sales chart. In the same year’s fourth quarter, BYD’s pure electric sales first surpassed Tesla, becoming the global quarterly sales champion for pure electric vehicles.

In 2025 (estimated), BYD’s sales are expected to reach 5.5-5.8 million units, up about 30% year over year, and it is expected to surpass Volkswagen to become the top three automaker in global sales.

Even more notable is that in 2025, BYD’s full-year pure electric sales are expected to exceed Tesla, making it the global annual sales champion for pure electric vehicles.

Part 2: The battle with Tesla—two champions, a duel for dominance in the new energy era

2.1 Collision of two routes

BYD’s competition with Tesla, at its core, is the collision of two technology routes, two business models, and two corporate philosophies.

Technology route: Tesla sticks to a high-end pure-electric route, from the Roadster to Model S/X, then to Model 3/Y—always focusing on pure electric vehicles, primarily using ternary lithium batteries. BYD, on the other hand, adheres to a “pure electric + plug-in hybrid” dual-wheel drive and mainly promotes lithium iron phosphate batteries.

Business model: Tesla adopts a direct sales model with no dealer network; all vehicles are sold directly through the official website or experience stores, with pricing unified across the country. BYD uses the traditional dealer model and has a huge sales network, but its pricing system is relatively chaotic.

Brand positioning: Tesla was positioned as a tech luxury product from the moment it was founded, and Musk himself is the biggest brand ambassador. BYD started in the low-end market and only in recent years has pushed the brand upward through models such as Han, Tang, and Sealion.

2.2 The sales battle: from catching up to surpassing

2019: Tesla’s global sales were 368,000 units; BYD’s new energy vehicle sales were 229,000 units.

2020: Tesla’s global sales were 499,000 units; BYD’s new energy vehicle sales were 189,000 units (affected by the pandemic). That year, Tesla’s market value surpassed Toyota to become the world’s No. 1 automaker, and Musk’s personal wealth also rose accordingly.

2021: Tesla’s global sales were 936,000 units; BYD’s new energy vehicle sales were 594,000 units. The gap is narrowing, but Tesla is still the king.

2022: BYD surpassed Tesla with 1.86 million units (1.31 million), becoming the global new energy vehicle sales champion for the first time.

2023: BYD sales were 3.02 million units; Tesla sales were 1.81 million units, and the gap widened further.

2024: BYD sales were 4.27 million units, of which pure electric was about 1.76 million; Tesla sales were 1.79 million. BYD’s pure electric sales first surpassed Tesla in the fourth quarter.

2025 (estimated): BYD sales are expected to be 5.5-5.8 million units, including about 2.3 million pure electric; Tesla sales are about 1.9-2.0 million units. BYD is poised to fully surpass Tesla in annual pure electric sales for the first time, becoming the true global new energy vehicle dominance leader.

2.3 The profitability battle: Tesla’s moat

However, sales surpassing does not automatically mean comprehensive leadership. In terms of profitability, Tesla still leads by a wide margin.

In 2025 (estimated), Tesla’s automotive business gross margin is about 16-18%, while BYD’s automotive business gross margin is about 20-22% (thanks to vertical integration and scale effects). Tesla’s net profit per vehicle may still be slightly higher than BYD’s, mainly due to:

1. Higher average selling prices: Tesla’s core models Model 3/Y are priced in the 200,000-350,000 yuan range, while BYD’s core models Qin and Song are priced in the 100,000-200,000 yuan range.

2. Software and service revenue: Tesla’s FSD (Full Self-Driving) software package is priced as high as USD 15000, and subscription service revenue continues to contribute profits. BYD still has a gap in intelligentization software.

3. Carbon credit revenue: Tesla earns billions of dollars every year by selling carbon credits.

This means that although BYD has surpassed Tesla in sales, it still has room to catch up in profitability and brand premium.

2.4 Intelligentization: The final battlefield

If electrification is the first half, intelligentization is the second half.

Tesla has consistently led in intelligentization: its FSD autonomous driving system, OTA remote upgrades, and in-car entertainment system—each is something Tesla first introduced and has continued to iterate on. Musk even boldly said: “The value of FSD exceeds the sum of all of Tesla’s other businesses.”

By comparison, BYD started later in intelligentization. Until 2023, BYD only introduced its self-developed high-end advanced driving system “TianShen Yan (God’s Eye),” and it was first equipped on the Denza N7. In 2025, BYD accelerated its intelligentization rollout, announced the “mass-market intelligent driving” strategy, standardizing advanced driving on models above 100,000 yuan, and offering advanced driving options on models priced at 70,000-100,000 yuan, significantly lowering the threshold for an advanced driving experience.

The gap in intelligentization is shrinking quickly. In 2025, through the “mass-market intelligent driving” strategy, BYD rapidly popularized advanced driving systems across its entire product lineup. With data accumulation of several million new cars every year, its intelligent driving capabilities are rapidly catching up with industry leaders.

Part 3: The core technology moat—BYD’s “technology fishpond”

Wang Chuanfu has a famous metaphor: BYD has a technology fishpond—whatever the market needs, it will scoop out a “fish.”

So how many “big fish” have been raised in this “technology fishpond”?

3.1 Blade battery: Redefining battery safety

In March 2020, BYD released the Blade battery.

The core innovation of this battery lies in structural innovation—by turning the battery cells into long and thin “blade” shapes and adopting a no-modules design (CTP), directly integrating them into the battery pack. This design greatly improves volumetric energy density, allowing lithium iron phosphate batteries to achieve a range of over 600 kilometers, comparable to ternary lithium batteries.

More importantly, the Blade battery passed the industry’s most stringent needle-puncture test: after a steel needle punctures the cell, the Blade battery does not catch fire or explode, and the surface temperature is only 30-60℃; while ternary lithium batteries instantaneously burst into flame in the needle-puncture test, with temperatures exceeding 500℃.

This technological breakthrough completely reversed the market position of lithium iron phosphate batteries. Before 2021, ternary lithium batteries held more than 70% of China’s power battery market share; by the end of 2025, lithium iron phosphate batteries have reached more than 75% share, and they are expanding rapidly worldwide.

BYD’s Blade battery is not only used in-house, but also supplied to automakers such as Toyota, Ford, and Tesla. This itself is a recognition of its technological strength.

3.2 DM-i Super Hybrid: The ultimate weapon to disrupt gasoline cars

If pure electric is the long-term plan to replace gasoline vehicles, then plug-in hybrid is the most practical transitional solution for the current stage.

In 2021, BYD launched its DM-i Super Hybrid technology. Its core features are:

• Electricity-dominant: for most of the time, it uses pure electric drive, with the engine mainly acting as a generator.

• Ultra-low fuel consumption: in charge-depleting mode, fuel consumption is only 3.8L/100km, far lower than gasoline vehicles in the same segment.

• Extra-long range: combined range exceeds 1,000 kilometers, thoroughly solving range anxiety.

• “Gas and electric at the same price”: the cost is already comparable to, even lower than, gasoline vehicles in the same segment.

With the launch of DM-i technology, BYD established absolute advantages in the 100,000-200,000 yuan mainstream market. After models such as Qin PLUS DM-i and Song PLUS DM-i were launched, demand exceeded supply, and waiting times for taking delivery were as long as several months.

The strategic significance of DM-i lies in the fact that it allows new energy vehicles to truly enter the mass market. Before this, new energy vehicles were mainly policy-driven (subsidies, license quotas); after this, new energy vehicles became market-driven (product strength surpassing gasoline vehicles).

3.3 Yi Sifang and Yun Nian: Breakthroughs in high-end technology

In 2023, BYD released two core technologies that shocked the industry:

Yi Sifang technology: a four-motor independent drive system. Each wheel is controlled by an independent motor, enabling:

• Pivot turning in place (tank turn)

• Lateral movement (crab-walk mode)

• Emergency wading through water (driving in water)

• High-speed tire blowout stability control

Yun Nian system: an intelligent body control system, including:

• Yun Nian-C: intelligent damping body control

• Yun Nian-A: intelligent air suspension body control

• Yun Nian-P: intelligent hydraulic body control

• Yun Nian-X: fully active body control (can “jump” from a standstill)

The release of these two technologies marks BYD’s achievement of surpassing traditional luxury brands in high-end technology areas. Features such as pivot turning in place and emergency wading through water are capabilities that even Mercedes-Benz, BMW, and Audi cannot deliver, while BYD’s Yangwang U8 has already entered mass production and deliveries.

3.4 Vertical integration: The core “password” of cost control

BYD’s most unique capability is its ability to vertically integrate.

From battery, motors, and electronic controls to chips and sensors, as well as the vehicle body, BYD almost self-develops and self-produces all core components. This kind of vertical integration brings several clear advantages:

1. Cost control: no middlemen capturing margin, and costs are far lower than competitors. In 2025, the starting price of BYD Qin PLUS DM-i had dropped to 79,800 yuan, while joint-venture gasoline cars in the same segment were still priced above 110,000 yuan. BYD’s price advantage becomes even more pronounced.

2. Supply security: not constrained by external suppliers. During the global chip shortage of 2020-2022, BYD was the only automaker that did not halt production, because it self-develops and self-manufactures IGBT chips.

3. Iteration speed: the speed from R&D to mass production is far faster than the industry average. For a traditional automaker, it takes 4-5 years from project approval to market launch; BYD needs only 2-3 years.

This vertical integration capability gives BYD absolute initiative in price wars. In 2025, BYD continued to optimize its cost structure. While maintaining price competitiveness, its automotive business gross margin still remained above 20%, showcasing strong profitability.

Part 4: Toyota’s global dominance—why the king of the gasoline era rose

To understand how far BYD is from Toyota, first we need to understand how Toyota became a global powerhouse.

4.1 From textile mills to an automotive empire (1937-1970)

Toyota’s history can be traced back to 1937. Founder Kiichiro Toyoda spun off the automotive division from his father Kiichiro Toyoda’s textile machinery plant and established the Toyota Motor Corporation.

In the early days, Toyota learned from the U.S. Ford’s assembly-line production approach. But soon, Toyota developed its own distinct “Lean Production” system.

The core of this system is: eliminate all waste, and produce only the quantity needed when it is needed.

“Lean production” allowed Toyota to survive the post-war Japan environment of scarce resources, and it gradually built quality advantages. In the 1960s, Toyota launched the Corolla. This economical sedan quickly became popular worldwide with its “good value for money,” becoming one of the best-selling models in history (cumulative sales exceeding 50 million units).

4.2 Global expansion: From Japan to the world (1970-2000)

In the 1970s, the oil crisis erupted, giving rise to a historic opportunity for fuel-efficient, durable Japanese cars.

Toyota seized this opportunity and expanded the North American market aggressively. In the 1980s, Toyota built production bases in the United States, avoiding trade frictions while also gaining deeper understanding of local market needs.

At the same time, Toyota built a comprehensive global R&D system and supply chain network:

• Set up an R&D center in the United States to develop models for the North American market (such as Camry and Highlander)

• Set up an R&D center in Europe to develop models for the European market (such as Yaris and Auris)

• Build production bases in Southeast Asia, South America, and Africa to enable localized production

This “Glocalization” strategy helped Toyota become a true global brand, not just an exporter.

4.3 Technological leadership: The pioneer of hybrid power (1997-2020)

In 1997, Toyota introduced the world’s first mass-produced hybrid car—the Prius.

This model uses Toyota’s THS (Toyota Hybrid System) hybrid technology. Through efficient cooperation between the engine and electric motor, it achieves extremely low fuel consumption. Against a backdrop of high fuel prices, Prius quickly became a favorite of environmentally conscious consumers, solidifying Toyota’s dominant position in hybrid technology.

Over the next 20-plus years, Toyota continually iterated its hybrid technology, forming a complete product lineup covering sedans, SUVs, and MPVs. By the end of 2025, Toyota’s cumulative global sales of hybrid models are expected to exceed 28 million units, making it the undisputed king of hybrids.

The success of hybrid technology brought Toyota several important benefits:

1. Technology barriers: accumulated a large number of hybrid patents, making it difficult for competitors to bypass.

2. Brand recognition: established a “fuel-saving, eco-friendly, reliable” brand image.

3. Profit space: hybrid models are priced higher than ordinary gasoline cars, with higher profit margins.

4.4 The secret to being the global sales champion

Toyota has been the global sales champion for many consecutive years. Its success can be summarized in the following points:

1. Extreme reliability

“An unbreakable Toyota” isn’t just a slogan. In various reliability rankings, Toyota is often at the top. This reliability comes from:

• Stringent quality control systems

• Conservative technology route (not rushing to adopt new technologies that haven’t been fully validated)

• A comprehensive after-sales service network

2. A rich product lineup

Toyota has a complete lineup from microcars to luxury cars, from sedans to SUVs to pickup trucks, covering almost all market segments:

• Economy segment: Corolla, Yaris

• Mid-size cars: Camry, Avalon

• SUVs: RAV4, Highlander, Prado, Land Cruiser

• Luxury cars: Lexus entire lineup

• Pickups: Hilux, Tacoma

• Sports cars: Supra, GR series

3. Global layout

Toyota has more than 50 production bases worldwide, and its sales network covers more than 170 countries and regions. True globalization is not simply exporting, but localized R&D, production, and sales.

4. Prudent business style

Toyota’s business style is extremely steady:

• It does not pursue maximizing short-term profits; instead, it pursues long-term sustainable development

• Maintains ample cash flow (Toyota’s cash reserves have been above USD 50 billion for years)

• Makes cautious investment decisions without blindly expanding

This steady style has kept Toyota standing through multiple economic crises.

Part 5: Comprehensive comparison—BYD vs Toyota in a strength showdown

5.1 Sales comparison: Catch-up is underway

Analysis: In the new energy sector (especially pure electric), BYD has already surged ahead of Toyota, and the overall sales gap is narrowing. However, in overseas markets there remains a huge gap. It is expected that by the end of 2025, BYD’s global market share will reach about 7%, while Toyota’s will be about 14%.

5.2 Financial comparison: The gap in profitability

Analysis: Toyota’s profitability still leads BYD, but the gap is narrowing. Thanks to scale effects and vertical integration, BYD’s net profit per vehicle is rising steadily. It is expected that in 2026-2027, BYD’s net profit per vehicle may exceed 15,000 yuan.

5.3 Technology comparison: A battle of routes

Analysis: BYD leads in electrification (pure electric, plug-in hybrid), while Toyota leads in hybrids and hydrogen fuel. The two technology routes represent different judgments about the future.

5.4 Globalization comparison: The biggest shortcoming

This is the largest gap between BYD and Toyota.

Toyota’s globalization level:

• Overseas sales account for more than 80%

• Has production bases in North America, Europe, Southeast Asia, South America, Africa, and the Middle East

• Has a complete sales network and after-sales service system in major markets

• Global leading brand recognition

BYD’s globalization level:

• Overseas sales account for about 15% (estimated about 8.0-10.0 million units in 2025)

• Overseas production bases are accelerating (Thailand, Brazil, Hungary, Indonesia, Turkey, etc. have already been put into production or are under construction)

• Expansion of major export markets to Southeast Asia, South America, the Middle East, and Europe; the U.S. market remains limited

• Brand recognition in new energy is rising quickly, but overall brand influence still needs time to accumulate

Globalization cannot be completed overnight. Toyota took half a century to build its globalization layout, while BYD has only just started.

5.5 Brand power comparison: From value-for-money to brand premium

Toyota’s brand power:

• Reliability: globally recognized “an unbreakable Toyota”

• Retained value rate: consistently leads in the used-car market

• Premium positioning: Lexus has become a major global luxury car brand

• Brand loyalty: users often repurchase when switching cars

BYD’s brand power:

• Leader in new energy: global sales champion for new energy vehicles

• Technological leader: technologies such as Blade battery and DM-i are recognized

• Value-for-money: far lower than competitors at the same configuration prices

• Premium upward movement: premium brands such as Yangwang and Fangchengbao are starting to build recognition

The gap: BYD still has clear gaps in brand premium, retained value, and premium recognition. Consumers buy BYD more because of “good value for money,” not because of “aspiration for the brand.”

Part 6: How far is it? Rational analysis of BYD’s opportunities and challenges

6.1 Gap assessment: analysis across three dimensions

First dimension: sales gap

Using estimated 2025 data, BYD’s sales are about 5.65 million units, while Toyota’s are about 11.25 million units, a gap of about 5.60 million units.

Assuming BYD maintains annual growth of 25-30% and Toyota maintains steady growth of 2-3%, BYD would need about 5-6 years to come close to Toyota in sales.

But considering that:

• As the base grows, growth rates will inevitably decline

• Toyota’s foundation in global markets is deep

• Expanding overseas markets takes time

• Geopolitical risks may affect the pace of going abroad

A more realistic estimate is: BYD needs 7-9 years to come close to Toyota in total sales.

Second dimension: profit gap

Toyota’s annual net profit is about RMB 270 billion (estimated), while BYD is about RMB 57.5 billion (estimated), a gap of about RMB 210 billion.

Reducing this gap depends on:

• Increasing the proportion of premium models (Yangwang, Fangchengbao, Denza)

• Improving gross margin in overseas markets

• Releasing scale effects further

• Increasing revenue from intelligentized software services

Under an optimistic scenario, BYD needs 4-6 years to come close to Toyota in profit scale.

Third dimension: globalization gap

This is the hardest to quantify, but also the most critical gap.

Toyota took 50+ years to build its globalization layout, and BYD cannot complete the same level of construction within 5-10 years. Moreover, today’s geopolitical environment (trade frictions, tariff barriers) is much more complex than during Toyota’s globalization period.

BYD’s path to globalization will likely require at least 10-15 years.

6.2 BYD’s opportunities: the historical window of the new energy era

Even though the gap is huge, BYD also faces opportunities in history that are unprecedented.

Opportunity one: the global penetration rate of new energy vehicles is still in a fast growth phase

By the end of 2025, the global penetration rate of new energy vehicles is expected to reach about 22-25%, including about 45-50% in China, about 25-30% in Europe, about 12-15% in the U.S., and about 8-10% in other regions.

This means the new energy vehicle market still has several multiples of growth room. As the world’s largest manufacturer of new energy vehicles, BYD will fully benefit from this growth dividend.

Opportunity two: the pains of traditional giants’ transition

Traditional giants such as Toyota, Volkswagen, and General Motors have huge sunk costs in the gasoline vehicle space (factories, supply chains, talent), and transitioning to new energy vehicles faces a “multi-front pressure” dilemma.

By contrast, BYD has already completed its full transition and can devote all efforts to R&D and production of new energy vehicles.

Opportunity three: the maturity of China’s automotive supply chain

China has already built the most complete and most competitive new energy vehicle supply chain in the world. From lithium ore mining and battery production to motors, electronic controls, and chips—China has world-class suppliers.

Relying on this supply chain ecosystem gives BYD clear advantages in cost and efficiency.

Opportunity four: a ticket to the second half of intelligentization

Electrification is the first half; intelligentization is the second half.

In electrification, BYD has already established a leading advantage. In intelligentization, although it started later than Tesla, BYD has amassed a large amount of data (several million new cars per year driving on the road equipped with sensors) and has strong rapid iteration capabilities.

If BYD can achieve breakthroughs in intelligentization, it will build an even wider moat.

6.3 BYD’s challenges: risks that cannot be ignored

Challenge one: brand recognition in overseas markets

Outside China, BYD’s brand recognition is still very low. In most markets, when consumers hear “BYD,” the first thing that comes to mind is “cheap Chinese cars,” not “a technology leader in new energy vehicles.”

Changing this perception requires time and continuous investment.

Challenge two: geopolitical risks

In the current international environment, Chinese companies going abroad face increasing political resistance:

• The European Union has imposed additional countervailing and anti-subsidy duties on Chinese electric vehicles

• The U.S. market is basically closed to Chinese cars

• Other markets such as India and Brazil also have various barriers

How to advance globalization amid complex international conditions is a major challenge BYD faces.

Challenge three: the ceiling of premium positioning

Although BYD has introduced premium brands such as Yangwang and Fangchengbao, in the market above 300,000 yuan, consumers still tend to prefer brands like Mercedes-Benz, BMW, Audi, and Tesla.

How to break through the “value-for-money” label and build genuine brand premium capabilities is BYD’s long-term challenge.

Challenge four: the gap in intelligentization

In areas such as autonomous driving and intelligent cockpits, players like Tesla, Huawei, and XPeng still lead BYD.

Intelligentization is the future of the automotive industry. If BYD cannot break through in this area, it may lose its competitive advantage in the second half.

Challenge five: upgrading the management system

As BYD expands rapidly in scale, it faces the challenge of upgrading its management system:

• How to manage more than 600,000 employees?

• How to build localized management capabilities during globalization?

• How to build standardized management systems while maintaining the startup culture?

If these issues are not handled well, they may become bottlenecks restricting development.

Part 7: The road to the throne—how BYD can become the Toyota of the new energy era

7.1 Strategic recommendations: breakthroughs across four dimensions

First, globalization: from exporting to deep cultivation

BYD’s overseas strategy at present is mainly “export + build factories,” but that is far from enough. To become a truly global brand, it needs:

• Localized R&D: establish R&D centers in major markets such as Europe and the U.S., developing products based on local needs

• Localized supply chain: build a complete supply chain system locally to reduce costs and avoid trade barriers

• Localized management: hire local executives and build localized management teams

• Localized branding: formulate differentiated brand strategies for different markets

Learn from Toyota’s “glocalization” experience rather than simply copying the China model overseas.

Second, premium positioning: from value-for-money to brand aspiration

BYD must break through the “value-for-money” label and build genuine brand premium capabilities:

• Continuous technological innovation: achieve breakthroughs in intelligentization, autonomous driving, etc., establishing a technology-leading image

• Extreme product experience: not only lead in hardware, but also surpass competitors in software and services

• Brand culture building: like Tesla, build a unique brand culture and set of values

• User community operations: cultivate a loyal user base to enhance brand loyalty

Whether the Yangwang brand succeeds will determine whether BYD can enter the truly luxury car market.

Third, intelligentization: seize the high ground in the second half

Intelligentization is the future of the auto industry, and BYD must increase investment:

• Autonomous driving: accelerate R&D and deployment of advanced driving systems to narrow the gap with Tesla

• Intelligent cockpit: improve user experience of the vehicle computer system and build an open ecosystem

• AI technology: deploy cutting-edge technologies such as large models and explore AI applications in the automotive field

• Data operations: fully leverage massive data assets and build a data-driven R&D and service system

Intelligentization investment cannot be stingy—it is the key to determining the outcome of the future.

Fourth, sustainable development: from making money to becoming great

Toyota became a great company not only because it sells a lot, but also because it has pushed progress across the whole industry (lean production, hybrid technology).

For BYD to become a great company, it needs:

• Promote industry standards: participate in drafting international standards for new energy vehicles

• Open technology: like Tesla’s open patents, push joint progress across the industry

• Social responsibility: take on more responsibility in environmental protection, public welfare, and more

• Corporate culture: build a unique corporate culture and attract the best talent

7.2 Timeline forecast: How far is the road to No. 1 globally?

Based on the analysis above, I make the following predictions about BYD’s future development:

2025-2027: consolidate the China market and accelerate overseas expansion

• China market share continues to rise, expected to reach over 38%

• Annual overseas sales surpass 1.5 million units (target for 2027)

• Europe, Southeast Asia, and South America markets initially take hold

• Monthly sales of premium brands (Yangwang, Fangchengbao, Denza) surpass 20,000 units

2028-2030: initial effectiveness of globalization, strengthening brand power

• Global annual sales surpass 9 million units, nearing 75-80% of Toyota

• Overseas market share reaches 35%

• Establish stable brand recognition in Europe and the U.S.

• Intelligentization technologies reach industry-leading levels

2031-2035: challenge for global No. 1

• Global annual sales surpass 12 million units—riding alongside Toyota, and possibly surpassing

• Overseas market share reaches 40-45%

• Become a globally recognized leader in new energy vehicles

• Fully close in on or surpass Toyota in brand power, technical strength, and profitability

Conclusion: As of the end of 2025, BYD will likely need about 8-12 years to become the Toyota of the new energy era.

This is not an easy road, but if history can be used as a reference, Toyota took roughly the same amount of time to grow from a small Japanese factory to a global powerhouse.

Final word: The baton pass of the era

The automotive industry has over 130 years of history and has witnessed multiple transfers of power:

• In the 1900s, Ford brought cars into homes worldwide with the assembly line

• In the 1970s, Toyota conquered the post-oil-crisis world with lean production and fuel efficiency and durability

• In the 2020s, BYD ushered in a new era with electrification and intelligentization

In every era, there is its own king.

Akio Toyoda once said, “Toyota’s enemy is yesterday’s Toyota.” The same line applies to BYD.

BYD’s journey to become the Toyota of the new energy era may still take another 8-12 years. But what matters is that BYD is already standing on the right track—and running faster than anyone.

The wheels of history roll forward. The dusk of the gasoline vehicle era is already here, and the dawn of the new energy era is rising.

In this once-in-a-century transformation, will BYD be able to take up the baton in Toyota’s hands and become the next global automaker king?

Time will give us the answer.

Author of this article: Bosezi | Zhizao Insights column

Data sources: publicly available financial reports, industry reports, and official announcements

Disclaimer: This article only represents the author’s personal views and does not constitute investment advice