MILAN/SHANGHAI (Reuters) -China's leading EV maker BYD is overhauling its European operations after strategic missteps including failures to sign up enough dealers and hire executives with local-market knowledge and to offer hybrids in markets resistant to fully electric vehicles, six current and former BYD executives said.
BYD has moved swiftly to address these early stumbles in this critical export market, greatly expanding its dealer network and offering hefty pay packages to poach executives from European automakers, especially Stellantis, the executives said.
Auto Shanghai show in Shanghai
The Chinese EV leader announced in December that plug-in hybrids would be crucial to its European strategy. That decision came after BYD European special adviser Alfredo Altavilla - among the key executives hired in BYD's European reboot - advised BYD Founder and Chairman Wang Chuanfu that a pure EV strategy was still a hard sell in many European countries.
"He was very quick to get the message and give the input to BYD's engineers that every new model would have to come both in EV and hybrid" versions for Europe, Altavilla told Reuters. "It is necessary to educate customers in the green transition."
Hires of some individual European executives have been reported, and BYD has publicly acknowledged problems in the German market. This is the first detailed account of the problems identified by executives inside BYD and its systematic efforts to address them. Most of the executives spoke on condition of anonymity to discuss sensitive strategic issues.
BYD declined to comment.
In December, Altavilla announced in Italy that plug-in hybrids would be "at the core of BYD strategy in Europe" moving forward, adding it would be "stupid" to go against consumer preferences by offering only EVs.
BYD first approached Altavilla, a former Fiat-Chrysler executive, last June and announced his appointment in August. He had been working as a senior adviser to private equity firm CVC Capital Partners.
Altavilla in turn hired several rising-star managers from Stellantis, including Maria Grazia Davino to run Germany and a handful of other central European countries, Alessandro Grosso in Italy and Alberto De Aza in Spain. The Chinese automaker offered them significant pay increases and a "chance to grow," a current BYD executive said.
"These were not people that we were happy to lose," said a Stellantis source familiar with the work of the executives poached by BYD.
HIGH EXPECTATIONS
In another sign of BYD's determination to swiftly bolster its European operations, the company last year put its No. 2 executive, Stella Li, in charge of the region.
She replaced former European chief Michael Shu, who had predicted BYD would capture at least 5% of Europe's EV market before it launches production at its first European plant in Hungary later this year. BYD ended 2024, however, with just a 2.8% share and sales totalling 57,000 vehicles, below company expectations.
BYD's urgency to grow in Europe stems in part from its track record of soaring sales in China, which have increased seven-fold since 2020 to 4.2 million vehicles in 2024. BYD surpassed Tesla last year as the world's top EV seller and is now the sixth-largest global automaker.
BYD also faces Chinese rivals rushing to enter Europe, including Chery, Geely, Xpeng and most recently Changan. All Chinese automakers face pressure to grow in foreign markets to boost profits, which are hard to sustain in China because of a protracted price war among scores of EV brands.
BYD partners and industry experts say BYD has acknowledged its Europe problems and moved decisively to address them.
"They are taking this very seriously, but they need to understand that building up a position in Europe takes time," said Tim Albertsen, CEO of Ayvens, one of Europe's largest leasing companies and a BYD partner in the region. "Just like European or American automakers coming to China, what the Chinese do well in China doesn't always work in Europe."
There are early signs that BYD's European reboot is showing results. BYD's European sales, including the United Kingdom, have more than tripled in the first quarter of 2025 to more than 37,000 vehicles, compared to about 8,500 in the first quarter of 2024.
BYD's strength in China in part reflects its ability to "evolve very quickly to give consumers what they want," said Bo Yu, China country manager at research firm JATO Dynamics.
The EV giant, for instance, undercut Chinese rivals in February by offering its "God's Eye" assisted-driving technology for free across its lineup, including in vehicles costing less than $10,000.
At this week's Shanghai auto show, BYD put on an enormous display of vehicles under four different brands that dwarfed those of most other automakers. The company unveiled new models ranging from the low-cost Seal 06 and Sealion 06 - starting at about 100,000 yuan ($13,700) and 160,000 yuan, respectively - to the Yangwang U8L, an ultra-luxury three-row SUV, and the Denza Z, a high-end sports car concept.
LACKING LOCAL KNOWLEDGE
After its meteoric rise in China, BYD expanded to Europe in 2023 with bold ambitions. Former Europe boss Shu said last May that BYD aimed to be the region's top EV seller by 2030.
But BYD failed to study Europe's markets beforehand, the current and former managers said.
In a telling example, BYD bought an expensive and high-profile sponsorship of the Euro 2024 soccer championship in Germany, where it billed itself as the No. 1 "NEV" maker, meaning "new energy vehicle." That is a term commonly used in China to describe the combined EV-and-hybrid sector - but the acronym is meaningless to German customers.
BYD's initial dealer network was also too small and too concentrated in major cities, the BYD sources said.
In Germany, BYD now plans to expand its dealer network to 120 locations from 27, BYD's Davino, the former Stellantis manager tapped to run Germany, told Reuters in March.
Germany's is Europe's largest auto market with 2.8 million vehicles sold last year. BYD sold fewer than 2,900 cars there in 2024. "The market in Germany is not easy," Davino said. "The basics are still missing here."
Former managers said BYD's core mistake prior to launching Europe was to treat it like a single market - like China or the United States - rather than dozens of different countries.
One former BYD manager compared Europe's national markets to "frogs in a pan," all jumping in different directions, adding: "BYD is only now beginning to learn that."
(Reporting by Nick Carey in London and Giulio Piovaccari in Milan; Additional reporting by Alessandro Parodi in Gdansk; Editing by Brian Thevenot and Jamie Freed)
