Chinese electric vehicle manufacturer BYD has announced plans to establish a third manufacturing plant in Europe. The move is part of a broader strategy to produce all vehicles sold on the continent locally within the next three years, a decision aimed at improving supply chain efficiency and mitigating potential European Union tariffs.
Key Takeaways
- BYD is planning a third vehicle manufacturing site in Europe, in addition to upcoming factories in Hungary and Turkey.
- The company is also considering a separate European facility for battery production to support its vehicle assembly operations.
- BYD aims to manufacture all electric vehicles for the European market locally within three years to avoid potential EU tariffs.
- In July, BYD's new car registrations in the EU surpassed Tesla's, reaching 9,698 units.
- Warren Buffett's Berkshire Hathaway has completed its exit from a 17-year investment in BYD, realizing a significant profit.
BYD Deepens European Manufacturing Commitment
BYD is significantly expanding its production capabilities in Europe with plans for a third vehicle assembly plant. This new facility will complement two other sites already under development. The company is currently building a factory in Hungary, which is expected to begin operations by the end of this year.
A second plant in Turkey is slated to start production in 2026. Together, the Hungarian and Turkish facilities are projected to have a combined annual capacity of approximately 500,000 vehicles. The location for the third factory has not yet been disclosed, but the company confirmed it is in discussions with authorities across Europe.
Integrating the Supply Chain with Local Battery Production
To support its vehicle assembly ambitions, BYD is also exploring the construction of a battery manufacturing plant in Europe. According to company special adviser Alfredo Altavilla, localizing battery production is a critical component of the strategy.
"It does not make sense to invest in car assembly in Europe but bring batteries from China," Altavilla stated during an automotive conference in Milan.
This approach aims to create a more resilient and cost-effective supply chain, reducing reliance on long-distance shipping for core components. A dedicated battery facility would ensure a steady supply for its European car plants.
Strategic Rationale: Avoiding Tariffs and Boosting Sales
BYD's push for localized production is a direct response to the increasingly competitive EV market and the looming threat of EU tariffs on Chinese-made vehicles. By manufacturing within the bloc, the company can bypass these potential trade barriers, making its vehicles more price-competitive.
Global Expansion and European Market Gains
The European expansion is part of a wider global strategy for BYD. The company is also establishing manufacturing sites in other international markets, including Brazil, as it works toward a significant long-term goal.
BYD has set a target to sell 50% of its vehicles outside of China by 2030. This reflects the intense competition within its domestic market and the need to diversify its revenue streams globally.
BYD Outpaces Tesla in Recent EU Sales
Recent data indicates that BYD's strategy in Europe is already yielding results. In July, new car registrations for BYD models in the European Union more than tripled to 9,698 vehicles. In contrast, registrations for Tesla models declined by over 42% to 6,600 cars during the same period, marking a significant milestone for the Chinese automaker on the continent.
Warren Buffett's Berkshire Hathaway Completes Exit
The news of BYD's expansion comes as Warren Buffett's investment firm, Berkshire Hathaway, has officially completed its exit from the company. After a highly profitable 17-year investment, Berkshire Hathaway disclosed in a March filing that its holdings in BYD had dropped to zero.
Berkshire began trimming its stake in August 2022, systematically selling shares as BYD's stock price surged. By June 2024, its ownership had fallen below the 5% threshold, meaning it was no longer required to publicly disclose further sales.
A Successful Investment Concludes
Alfredo Altavilla commented on the conclusion of the long-standing partnership, framing it as a successful business decision for the investment giant.
"He made a profit of 20 times the capital he invested. He did very well to do what he did," Altavilla said of Buffett. "We’ve been extremely glad to have had Buffett as an investor, but the fact that he monetised his position is exactly what Berkshire Hathaway does for a living: buying, earning and selling."
The exit marks the end of an era for BYD, which benefited significantly from the early backing of one of the world's most respected investors. The company's focus now shifts to executing its ambitious plans for global and European market dominance.
