China’s BYD is the largest EV maker, but it won’t be coming to the US anytime soon

The BYD Atto3.
Richard Bord/Getty Images

  • China’s BYD overtook Tesla last year as the world’s largest EV seller.
  • Just don’t count on the automaker entering the U.S. market anytime soon.
  • Geopolitical challenges and weak demand will make it difficult for BYD to “make a Toyota,” analysts say.

Japanese and Korean automakers conquered the U.S. market long ago, but don’t expect Chinese EV seller BYD to repeat the feat.

There is no chance the company, which surpassed Tesla last year to become the world’s top EV seller, will “do a Toyota” by expanding in the United States, a top executive said last month.

“We have no plans to come to the US,” Stella Li, CEO of BYD Americas, told Yahoo Finance. “It’s an interesting market, but it’s very complicated when you talk about electric cars.”

Analysts say even if BYD were to start selling its cars in the US, a combination of geopolitical challenges and weak demand would face an uphill battle.

“It would be very difficult for a Chinese EV maker to enter the US market,” Seth Goldstein, equity strategist at Morningstar, told Business Insider. “Even if BYD tried, I’m not sure how much consumer demand there would be – it would take some time for them to prove themselves.”

Make a Toyota

In the past, Asian car manufacturers have managed to capture a large share of the US market.

Toyota established its first office in North America in 1957, just twelve years after the end of World War II. It has since scaled up its US operations and in 2021 passed General Motors as the best-selling automaker.

Japanese rivals Nissan, Mazda, Lexus, Honda, Suzuki and Mitsubishi became extremely popular in the US in the second half of the 20th century. South Korea’s Hyundai and Kia also made great progress.

It’s easy to imagine BYD and other China-based EV brands similarly laying claim to the North American market. Just as more efficient production processes allowed Toyota and its peers to outperform their American rivals, BYD offers something different from its competitors.

Ford CEO Jim Farley said last month that smaller, cheaper electric vehicles would be key to boosting sales growth. Still, neither Ford nor Tesla seem close to launching a vehicle that could compete price-wise with BYD hatchbacks like the $11,000 Seagull.

The BYD seagull.
VCG via Getty Images

“Japanese and Korean manufacturers became successful in the US because they introduced a product that consumers were clamoring for,” Will Roberts, head of automotive research at EV intelligence firm Rho Motion, told BI. “Their cars were more reliable, more fuel efficient and more affordable… there’s certainly a comparison to be made here.”

However, things have now changed, he added: “Given the current tensions between the US and China, Chinese EV manufacturers are likely to find it a lot more difficult to enter the US market.”

Geopolitical challenges

Both Goldstein and Roberts cited the Inflation Reduction Act of 2022 as a factor that could make it much more difficult for BYD and other Chinese EV makers to expand in the US.

The bill, a key part of US President Joe Biden’s economic agenda, provides tax credits worth up to $7,500 for EV manufacturers, excluding any “foreign entity of concern.”

In November, the Ministries of Energy and Finance confirmed that companies from China, Russia, Iran and North Korea would all be classified as foreign entities – meaning Chinese EV makers such as BYD would not be eligible for the subsidies.

Joe Biden signs the Inflation Reduction Act in August 2022.
Demetrius Freeman/The Washington Post

The White House would likely implement more restrictions if BYD or another Chinese company tried to crack the U.S. market, Rho Motion’s Roberts said.

“If the US government were really concerned about this, you would quickly see legislation come into play that would either make it unaffordable to buy a Chinese-made electric car or contribute to consumers’ negative perception of these types of vehicles,” he said. BI. Biden’s decision to order an investigation into smart cars last month is a sign that lawmakers are determined to discourage the American public from buying Chinese cars, Roberts added.

Weak question

As if these restrictions weren’t daunting enough, Chinese EV makers may also conclude that there isn’t much life left in the US market, where EV sales are up just 1.3% in the last three months of 2023, according to data from Cox Automobiel.

BYD, for example, has pledged to scale up everywhere from Brazil to Thailand, but appears to have little appetite for growing its business in the US, where top Republican politicians – and some voters – have become aggressively anti-EV. The world’s largest economy also lags behind China when it comes to charging infrastructure.

Conservative politicians condemning EVs “may cause a lot of confusion among consumers and also among car manufacturers. They are not eager to invest,” BYD Americas CEO Li warned last month.

“In China, the message is strong. If you don’t invest in an electric car, you’re out. You die. You have no future,” she added.

BYD is not the only company turning its back on the American EV market. Apple has reportedly abandoned its longstanding efforts to build an electric car, while Toyota continued to focus on hybrids to drive down prices.

If BYD were to fail to crack the US, it wouldn’t be a death blow to the company; there is still potential to grow by ramping up its operations in Asia and South America, Roberts said.

But it won’t be able to repeat the success that Japanese automakers had at the end of the 20th century. Given that EV sales growth in the US has been stagnant, it’s perhaps no wonder that companies like BYD aren’t too concerned about it.

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