Trump’s Tariffs Backfire: How BYD is Racing Ahead of Tesla

Chinese EV Giant Turns US Absence Into a Global Advantage

Donald Trump’s latest round of tariffs was supposed to protect American electric vehicle (EV) makers like Tesla from growing Chinese competition. Instead, they’ve given BYD – Tesla’s biggest global rival – the edge it needed.

In the first quarter of 2025, BYD outsold Tesla in pure battery EVs for the second straight quarter, delivering over 416,000 units compared to Tesla’s 336,681. Once seen as a low-cost Chinese brand with limited global appeal, BYD is now outpacing Tesla in sales, growth, and profitability – and it’s not even selling in the US.

US Absence Now a Strength for BYD

BYD doesn’t operate in the United States due to steep tariffs introduced during Trump’s first term. That once-perceived weakness is now a strategic asset. Unlike Tesla, BYD has no exposure to US tariffs, political instability, or trade retaliation. It doesn’t need to protect factories, dealerships, or market share in the US.

Instead, the company has doubled down on international markets. In 2024, BYD exported more than 417,000 vehicles, with projections to double that figure in 2025. Its early push into Europe, Southeast Asia, and Latin America has paid off.

Tesla Caught in the Crossfire

Tesla’s global operations are increasingly exposed to geopolitical risk. It still relies heavily on China – its second-largest market – for both production and sales. But with rising nationalism and potential boycotts, that reliance could backfire.

In March, Tesla’s China-made EV sales dropped 11.5%, while BYD’s rose by the same margin. In Europe, Tesla’s dominance is also slipping. Countries like France and Sweden have reported sales declines of over 40% in early 2025, as BYD’s presence grows rapidly — including a sevenfold increase in UK deliveries.

Tesla’s Model X and other high-end models, built primarily in the US, may become targets if the EU responds with tariffs of its own.

The Financial Gap is Growing

Tesla may still be the most recognisable name in EVs, but BYD is outperforming it on key metrics:

• Gross profit margins: BYD 22.3%, Tesla just 13.6%

• Sales growth: BYD is expanding rapidly across new markets

• Reputation: BYD’s quiet leadership contrasts with Elon Musk’s headline-grabbing behaviour

BYD’s founder, Wang Chuanfu, a soft-spoken engineer, is becoming a symbol of strategic focus and stability — in stark contrast to Musk’s divisive persona.

A Broader Lesson in Global Trade

This isn’t just a rivalry between two EV giants — it’s a case study in the unintended consequences of protectionism. Trump’s tariffs were designed to shield American influence. Instead, they’ve pushed foreign firms to thrive in less politically charged markets and weakened US global reach.

As extreme tariffs become central to US economic policy, companies like BYD are learning to lead by staying agile and steering clear of geopolitical chaos.

Sources: (FT.com, BBC.co.uk)