FRANKFURT – BYD, China’s electric vehicle powerhouse, is quietly overhauling its European operations after facing unexpected hurdles in its ambitious expansion plans, multiple sources familiar with the matter have revealed.

Strategic Pivot Underway

The Shenzhen-based automaker, which surpassed Tesla in global EV sales last year, is recalibrating its approach to the European market following several critical missteps, including:

• Overestimating demand for its premium models in key markets
•  
• Underestimating logistical challenges in establishing local supply chains
•  
• Facing pushback from European automakers and policymakers over Chinese subsidies

According to internal documents and three sources within BYD’s European division, the company is now shifting focus toward:

Localized production: Accelerating plans for its first European factory in Hungary while exploring additional sites

Affordable models: Rebalancing its portfolio toward competitively priced vehicles rather than premium offerings

Dealer partnerships: Moving away from direct sales in favor of traditional dealership networks

Early Struggles in a Tough Market

BYD’s European ambitions hit turbulence soon after its high-profile launch last year. While the company successfully introduced its Dolphin and Atto 3 models, its premium Han sedan and Tang SUV failed to gain traction against established German rivals.

“We misread the premium segment,” admitted one BYD Europe executive, speaking on condition of anonymity. “European buyers in that category want German badges, at least for now.”

Logistical headaches compounded the challenges. Several shipments of vehicles were delayed due to customs clearance issues, while the lack of local service centers frustrated early adopters.

Political Headwinds Intensify

The strategic rethink comes as the EU ramps up its investigation into Chinese EV subsidies, with potential tariffs looming. BYD has been singled out in the probe due to its rapid market expansion.

“The political environment has changed dramatically since we first planned our European push,” another BYD insider revealed. “We need to be smarter about how we grow here.”

The Road Ahead

BYD’s revised strategy includes:

Fast-tracking its Hungarian plant to begin production by late 2025

Introducing a new, Europe-specific model tailored to local tastes

Partnering with leasing companies to boost fleet sales

Industry analysts see the moves as necessary but challenging. “BYD has the resources to adapt, but they’re learning what many Asian automakers have learned before them – Europe is a graveyard for foreign brands,” said Matthias Schmidt, an independent automotive analyst in Berlin.

The company remains publicly confident. “Our commitment to Europe is unwavering,” a BYD spokesperson said. “We’re here for the long term and will keep adjusting to market needs.”

What to Watch

Key milestones for BYD’s European reboot:

July 2024: Expected EU decision on Chinese EV tariffs

Q4 2024: Launch of new Europe-focused model

2025: Hungarian factory comes online

With Tesla and European automakers also retooling their EV strategies, BYD’s ability to execute its revised plan could determine whether it becomes a major player or just another cautionary tale in the complex European market.