BYD: A New Evergrande of Chinese Cars?

On June 25, several newspapers reported a drop in production at Chinese automotive giant BYD, after a remarkable 2024. A slowdown sufficient for old demons to catch up with the company. On May 23, 2025, the president of Great Wall Motors, Wang Jianjun, declared that "an Evergrande of the automotive industry already exists" during an interview with Sina.com. With this statement, he indirectly targets his main rival and giant of the electric automotive industry: BYD. After the liquidity crisis of the Evergrande group starting in 2020 and the partial failure of its expansion plan, the spectre of a new scandal seems to hang over the Chinese company.

But what does BYD really represent? Based in southern China, the company is one of the leaders of the Chinese high-tech sector and has experienced exponential growth for several years. Several factors explain this success. First, the success of its flagship models combined with lower manufacturing costs compared with its international competitors (around 25% lower). BYD therefore announced sales of 4.3 million electric and hybrid vehicles, for a net income of just over 5 billion over 2024, an increase of 41% compared with the previous year. By comparison, Tesla reported 1.7 million electric vehicles sold for total income of 7.13 billion over 2024, a 52% decrease compared with the previous year. Subsequently, Tesla''s setbacks following Elon Musk''s positioning as a supporter of Donald Trump, as well as malfunctions in autonomous driving, have greatly affected the US leader since the start of 2025.

BYD therefore seemed to have a clear road ahead in 2025. Yet several obstacles appeared. In the United States, the Trump administration largely thwarted its plans by imposing customs duties of 100%, enough to massively harm any expansion of activities. In Europe, BYD is seen as a danger rather than an opportunity. After the 2023 scandals over appalling working conditions for the company''s employees in Brazil, the risk of predation against European manufacturers is what holds Brussels back. Caught between the dilemma of supporting the more ecological electric vehicle industry and preserving European manufacturers and jobs, the European Union chose to maintain its customs duties of 17% on Chinese products. Its European action plan did not produce the expected result. Lacking truly high-quality models and a solid dealer network, European results fell well short of expectations, whereas BYD hoped to see its sales double. However, manufacturing projects in Hungary and Turkey have indeed come to fruition, keeping BYD''s ambitions afloat.

But what most worries observers are the company''s financial practices. In early January, a report by the GMT firm, which had detected the first irregularities at Evergrande in 2016, raised the alarm over the existence of debts hidden by the automotive company. Officially, the company reports debt of 27 billion yuan for revenue of 301 billion yuan in 2024. Yet, according to GMT, the actual amount of debt would be 323 billion yuan, that is 40 billion euros, or ten times more than initially announced. Enough to recall the Evergrande speculative bubble scandal. For now no statement has been made, except in May 2025 when BYD''s leader refuted any comparison with the previous scandal. For the company, debt is a support for its activities, allowing it to massively finance its production and feed its stocks intended for European markets, which are supposed to sell thanks to attractive prices.

This debt, most of which would be interest-free, would therefore serve the company''s strategy and would not constitute a risk of a new bubble bursting. It remains to be seen whether BYD''s recent setbacks will confirm or not the stability of this action plan.