BYD finds itself in an odd position: its new luxury SUV is smashing internal pre-order records, yet the Chinese auto maker is scrambling to arrest a deepening sales slump at home. Management has responded by dismantling the company’s central research institute and splitting it into five brand-specific units — a restructuring that aims to speed up the rollout of technologies such as the Xuanji A3 autonomous driving chip. At the same time, sources indicate BYD is evaluating a foray into Formula 1, either through a full team or a less capital-intensive sponsorship deal, as part of a broader push to lift global brand awareness.
The Great Tang SUV, a battery-electric model that can charge from 10% to 70% in five minutes, has attracted roughly 150,000 reservations since its launch, with a starting price of just under $36,000. European buyers will have to wait until early 2027 for the first deliveries. The vehicle represents an aggressive challenge to legacy premium marques, but the enthusiasm around it cannot disguise the rot in BYD’s domestic business. In the first five months of the year, sales in certain segments dropped by 20%, while the overall Chinese market — BYD’s home base — collapsed by 24% in May alone, marking the thirteenth consecutive monthly decline. Exports, by contrast, surged 80% in the same period.
That divergence helps explain why BYD is betting heavily on Europe. At the Goodwood Festival of Speed in July, the company will mount its largest-ever exhibition stand, spanning more than 2,000 square metres, and will feature models from both the main brand and its Yangwang sub-brand. The premium Denza division also intends to use the event to stage its official market entry in the UK. Yet even as BYD expands its physical footprint abroad, policymakers are tightening the screws. The European Commission plans to introduce new import tariffs on Chinese plug-in hybrids, the very vehicles that accounted for nearly 70% of BYD’s German registrations in May and that previously benefited from a 10% duty rate. Pure electric cars already face punitive tariffs of up to 35.3%. Brussels’ move threatens to undercut the price advantage that has fuelled BYD’s European growth, and new factories in Hungary and Brazil offer little near-term relief.
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The political headwinds are not limited to Europe. Washington recently placed BYD on a list of companies alleged to have ties to the Chinese military, adding another layer of uncertainty to the stock’s outlook. Against this backdrop, the idea of a Formula 1 entry has surfaced as a potential marketing gambit. A fully owned team is considered unlikely — entry fees alone can run into the hundreds of millions of euros, and the cost of factories and wind tunnels is prohibitive. A sponsorship arrangement with an established team, costing tens of millions annually, would be less risky and would sidestep the technical restrictions imposed by the sport’s governing body. Still, the prospect of competing for attention with Ferrari, Mercedes and Ford gives any such deal a high bar for returns.
Investors, at least, have yet to reward any of these moves. The share price closed the week at €8.90, just a hair above the year’s low of €8.82. Since January, the stock has lost roughly 35% of its value, and it now trades deep below its 200-day moving average. The relative strength index has fallen to 25.6, a level that technically indicates an oversold condition, but no sustainable recovery has materialised. A break below the €8.82 support would open the door to further downside.
The restructuring of BYD’s R&D operation — folding the central institute into five independent brand units: Dynasty, Ocean, Denza and others — is designed to cut costs and improve margins, but the market remains sceptical. The next few weeks will be decisive: if the stock fails to hold its current floor, the selling pressure could intensify. Meanwhile, management must prove that the marketing blitz in Europe and the potential Formula 1 sponsorship can translate into real sales growth, not just buzz. With domestic demand still contracting and new trade barriers looming, the path to stabilisation is narrowing.
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