BYD is reshaping Australia’s car market. How did it get here?

Since the Iran-US military conflict began earlier this year, disrupting global oil markets, Australia’s electric vehicle (EV) market has experienced an unprecedented boost.

With motorists facing sharp increases at the bowser and continuing uncertainty about fuel prices, many drivers have decided to go electric. EVs accounted for 25.8% of total car sales in the first half of 2026.

One brand in particular is capitalising on this trend, and that’s the Chinese carmaker BYD, whose name was previously spelled out as “Build Your Dreams”. It is now outselling many far older and more established competitors in Australia.

Fifteen years ago, Elon Musk poked fun at BYD, saying it was not a serious competitor in the electric vehicle business. And until just a few years ago, hardly anyone in Australia had even heard of the brand.

So how did BYD become such a formidable competitor in the EV market so quickly?

BYD’s origin story

BYD’s story began not with cars, but batteries. In 1995, 29-year-old battery specialist Wang Chuanfu founded the company in Shenzhen with a small team. BYD initially manufactured rechargeable nickel-cadmium batteries, before moving into lithium-ion batteries.

The company grew quickly, and by 2000, BYD had become Motorola’s first Chinese supplier of lithium-ion batteries. Nokia followed in 2002, and the same year BYD listed on the Hong Kong Stock Exchange.

In 2003, BYD entered the automotive industry by acquiring a struggling Chinese manufacturer. Its first model, the petrol-powered F3, arrived in 2005.

By then, BYD was already looking towards electrification. In 2008, it launched the F3DM plug-in hybrid. That same year, legendary US investor Warren Buffett backed the company with an investment of about US$230 million for a 9.9% stake, which he later sold.

When Bloomberg asked Tesla chief executive Elon Musk in 2011 about BYD as a potential competitor, he laughed. “Have you seen their car?” he asked, before saying he did not see BYD as a competitor.

But, by 2023, his assessment had completely changed: “Their cars are highly competitive these days.”

What do the sales numbers say these days?

Sales figures both in Australia and overseas show just how rapidly BYD has become a formidable name in the automotive industry.

Globally, BYD went from selling about 190,000 battery or hybrid vehicles in 2020 to 4.6 million in 2025 – a roughly 24-fold increase in just five years. Of the 2025 sales, 2.26 million were fully electric, enough to overtake Tesla’s 1.64 million deliveries.

Its rise in Australia has been similarly striking. In the first eight months of 2026, BYD sold more than 68,000 vehicles, making it Australia’s second-highest-selling car brand behind Toyota. In the month of June, just 243 sales separated the two.

Among electric vehicles, over the same period, BYD sold more than 39,000 cars, overtaking Tesla to become Australia’s highest-selling electric vehicle brand.

What is BYD’s secret sauce?

BYD’s rise from a relatively unknown battery maker to a global automotive giant cannot be attributed to any single factor. But four factors have likely been instrumental to its success.

First, BYD makes an unusually large proportion of its cars itself. This includes batteries, electric motors, power electronics and even some of the semiconductors its vehicles need. This high degree of “vertical integration” reduces its reliance on outside suppliers and gives BYD greater control over both its supply chain and production costs.

The company even owns and operates its own ships to transport the vehicles to Australia and other markets.

Second, BYD did not bet everything on fully electric vehicles. It also sells a large range of plug-in hybrids. This gave buyers who are not yet ready to rely entirely on battery power another route into electrification.

Third, BYD took a different approach to battery technology. Its Blade Battery uses lithium iron phosphate chemistry, which is generally cheaper than nickel-based alternatives and requires neither nickel nor cobalt.

Fourth, BYD has benefited substantially from China’s long-running support for its electric vehicle industry. This has included direct subsidies to manufacturers as well as subsidies and tax incentives for consumers buying electric vehicles.

A history of controversy

BYD’s rapid expansion has not been without controversy.

Despite its global success, BYD has never established passenger-car sales in the United States.

More recently, high tariffs and national-security concerns about Chinese vehicles have created prohibitive barriers to entry to the US market.

Cybersecurity concerns have also attracted scrutiny in Australia. This was highlighted in a recent ABC Four Corners investigation showing a cybersecurity expert remotely accessing functions in a BYD Shark 6.

Safety concerns have emerged too. While safety regulator ANCAP awarded the Shark 6 five stars, it also applied a penalty score for posing a greater risk to oncoming vehicles due to its size, weight and front-end design. The Shark 6 is larger than many of Australia’s largest utes, including some variants of the Ford Ranger.

A new global order for autos

For decades, Australia’s car market has been dominated by Japanese brands, with US, Korean and European manufacturers also prominent. Chinese brands are now challenging that order remarkably quickly.

China made becoming a global leader in electric vehicles an industrial priority. It has largely achieved that ambition.

If current momentum continues, the badges Australians see on their roads over the coming decade could look very different from those they grew up with. BYD is one name they are likely to see much more often.