BYD vs Tesla in Europe: Distribution Strategies and Manufacturing Expansion

• Distribution strategies: direct sales versus agents, online channels, and service-network efficiency

Each company’s sales model is a unique reflection of their corporate DNA and stage of development. Tesla has championed a factory-direct sales approach from its inception. In Europe, this translates to customer interaction through brand experience stores and an online ordering system. The company sets prices centrally, eliminating the need for negotiation. This model not only gives Tesla a firm grip on its brand image and customer experience but also eliminates dealer mark-ups, allowing for cost savings for buyers or higher margins for the company.

Tesla has emphasized digital operations from the start, offering over-the-air software updates, repairs booked through a mobile app, and other services that significantly enhance operational efficiency and customer convenience. The drawback is that Tesla must build and finance its own sales and service network. After years of work, it now operates showrooms, service centers, and a dense Supercharger network across Europe, providing owners with convenient charging and after-sales support. Thanks to strong sales of the Model 3 and Model Y, Tesla enjoys high brand recognition: in 2023, the Model Y was one of Europe’s best-selling cars of any powertrain. Even so, direct sales leave gaps: in customer groups still wedded to traditional buying habits, Tesla lacks the local dealers’ ties, and in new markets, it has been criticized for thin service coverage, a problem that increases with volume and must be continually addressed.

 

As a late entrant, BYD has adopted a more traditional yet pragmatic approach by opting for the dealer-agent route. Instead of establishing its showrooms, BYD relies on local groups to sell its cars. In early markets, such as Norway and the Netherlands, BYD has authorized importers and dealer networks to handle the Tang, Atto 3, and other models. In larger markets such as Germany, Britain, and France, it has opened stores in partnership with large dealer groups. This approach allows BYD to tap into Europe’s mature retail system, accelerating its roll-out and leveraging partners’ knowledge of local customs and marketing.

Initial results were mixed. Launched in 2023 with ambitious targets, BYD struggled when too few dealers signed up, and managers lacked local knowledge, resulting in sales falling below plan. BYD responded quickly: in late 2024, it initiated a “European business overhaul,” expanding its dealer network and hiring seasoned executives. Alfredo Altavilla, a former Stellantis executive, was engaged as a special adviser to accelerate channel growth. Product policy also shifted; to ease range anxiety, BYD announced that it would sell plug-in hybrids alongside pure electric vehicles. Altavilla argued that for many countries, a direct jump to BEVs was unrealistic. The move paid off: in the first quarter of 2025, BYD sold more than 37,000 NEVs in Europe and the UK—over triple the figure a year earlier—thanks in large part to PHEVs, which also sidestep new EU duties on Chinese BEVs. JATO data show that registrations of Chinese-brand PHEVs in Europe rose 546 percent year-over-year in April 2025 to 9,649 units, accounting for about ten percent of the segment.

 

The expanding dealer network is already showing results: in April 2025, BYD’s monthly European BEV registrations surpassed Tesla’s for the first time—a significant milestone for any Chinese brand. Tesla’s dip partly reflected its regular end-of-quarter delivery pattern, but BYD’s 359 percent surge was striking. A broad lineup—small Dolphin, compact Atto 3, large Han saloon, Tang PHEV SUV, and others—lets BYD cover segments that Tesla’s two-model line cannot. Active participation in local motor shows and test-drive events has increased visibility; in Britain, BYD registrations in early 2025 were higher than those of Fiat or Dacia.

Using agents means ceding some margin to the channel. To attract partners, BYD has reportedly offered generous credit and marketing support, which may impact short-term profits; uneven dealer quality can also lead to inconsistent customer experiences, an issue that BYD must closely monitor.

 

In after-sales and charging, Tesla holds clear advantages. Years of investment have created Europe’s most extensive fast-charging grid and a service model based on company-owned centers, as well as mobile repair vans, allowing many jobs to be done at owners’ homes or offices. BYD’s after-sales relies on dealers; volumes are still modest, but parts logistics and technician training must keep pace as the fleet grows. BYD cars can receive OTA updates; however, the firm’s software ecosystem and user community engagement lag behind Tesla’s and will require stronger local digital services.

To sum up, Tesla pursues a finely tuned direct-and-online model, delivering a uniform global experience and high service efficiency. BYD, on the other hand, is pursuing a flexible agent network and multi-product expansion strategy to rapidly gain market share. Each has strengths and weaknesses; both aim to boost penetration and customer satisfaction.

 

• Manufacturing expansion: Hungary versus Germany, local production and supply-chain development

Long-term competitiveness in Europe also depends on local production. Tesla and BYD are both building factories to avoid tariffs, create jobs, and raise acceptance.

Tesla opened its Grünheide Gigafactory near Berlin in 2022, the first large foreign EV plant in Europe. It built the Model Y and ramped output to over 6,000 units a week in early 2024, more than 300,000 a year. By late 2024, it had produced 400,000 cars. It had secured approval for Phase 1 expansion (new body shop, battery lab, and warehouses) toward an eventual one-million-unit capacity, which would make it one of Europe’s biggest auto plants. The project has faced opposition from environmental groups over forest clearing and water use, forcing Tesla to balance speed with social responsibility. Still, local production eliminates the ten-percent EU duty on imported cars and cuts delivery time and logistics costs. “Made in Germany” has become a Tesla selling point.

 

To counter Tesla’s head start, BYD moved in 2023 to build its first European passenger-car plant in Szeged, Hungary. Backed by Prime Minister Viktor Orbán’s “eastward opening” policy, the plant won tax incentives and infrastructure support. The investment is valued at approximately HUF 100 billion (€248 million) and is expected to create 2,000 jobs, with 90 percent of the positions being technical. The factory is scheduled to be online by late 2025, with an initial capacity of approximately 150,000 cars per year, expandable as demand grows. BYD also plans to establish a headquarters and R&D center in Budapest to enhance local engineering and supply chain coordination.

Hungary offers a central location, lower labor and land costs compared to Western Europe, and a government friendly to Chinese capital. Budapest opposed harsh EU measures during the 2023 subsidy probe. A local build will enable BYD to bypass EU import tariffs and enhance price competitiveness; UBS estimates that a BYD made in Europe could still undercut Western rivals by about 25 percent.

Both plants should foster local supply ecosystems. Tesla already sources some European parts and is adding battery-pack assembly. BYD is expected to ship key parts from China initially but aims to replicate its China model, drawing battery and motor suppliers to set up nearby. Local hiring will integrate each company into Europe’s engineering talent pool.

 

European manufacturing also brings brand benefits. Tesla, an American company producing in Germany, has won the goodwill of German officials and the public; Elon Musk’s frequent visits keep the media’s attention high. BYD’s significant Hungarian investment earns allies inside the EU and improves perceptions of Chinese makers. A “Made in Europe” label can reassure buyers in high-end markets wary of imports, and local production eases compliance with carbon footprint and origin rules that affect subsidies.

The contest between BYD and Tesla showcases two bold but contrasting global strategies. BYD, a rising force built on manufacturing prowess and cost leadership, uses safety-oriented batteries, a broad model mix, and dealer flexibility to expand fast, backing its ambitions with a European plant. Sales lagged at first—just 2.8 percent BEV share and 57,000 units in 2024—but surged in early 2025, overtaking Tesla in April registrations.

Tesla, the established innovator, combines direct sales, advanced software, and a strong brand with local production in Berlin. Though still Europe’s benchmark, its share slipped in early 2025 amid fresh pressure from Chinese brands. Analysts expect price wars to intensify. Tesla may respond with cheaper models, more capacity, and improved service; BYD will likely raise its technology game and deepen local R&D to close gaps at the high end.

 

For Europe’s legacy carmakers, the clash is both a threat and a catalyst, underscoring that victory in the EV era requires core technology and an efficient, low-cost supply chain. Consumers will benefit from more advanced, varied, and affordable choices as the market evolves in the years ahead.