BYD Knocks on Europe's Empty Factory Gates, Testing Brussels' Tariff Wall

Europe's car industry is confronting an awkward proposition. The Chinese manufacturer best placed to fill its idle factories is also the one its trade defences were built to keep out.

BYD, China's largest electric-vehicle maker, has been in talks with Stellantis and other European producers about taking over underused plants rather than building from scratch, a strategy that would let it sidestep the provisional tariffs of up to 35 per cent that Brussels imposed on Chinese-built EVs in 2024. By assembling inside the bloc, vehicles would circulate tariff-free across all 27 member states, neatly inverting the logic of the levy. Stella Li, BYD's executive vice-president for Europe and the Americas, has confirmed the discussions extend beyond Stellantis to other carmakers.

The appeal for European groups is uncomfortable but real. Volkswagen, Renault and Stellantis have struggled to fill capacity as demand softens, and empty lines are a fixed cost that erodes margins. BYD's overseas momentum, meanwhile, is striking. The group sold 135,000 vehicles abroad in April, up about 70 per cent year on year, and entered the top three EV brands in Europe behind Volkswagen and BMW, with battery-electric cars now around a fifth of the market.

BYD already has the building blocks in place, with a plant at Szeged in Hungary opening this year and a second site in Turkey due by 2027. An acquisition would compress that timetable by years.

For Brussels the dilemma is acute. The tariff regime was designed to slow Chinese entry and protect a sector employing some 13.6 million Europeans. Yet Chinese carmakers are increasingly buying their way inside the wall, plant by plant, leaving policymakers to weigh industrial sovereignty against the immediate cost of factories standing silent.