China’s EV boom was largely state-engineered. The “Made in China 2025” plan, launched in 2015, aimed to dominate high-tech sectors like EVs. Automakers received massive subsidies, sometimes as high as 60,000 yuan per car, encouraging overproduction and steep discounts.
While subsidies fueled rapid growth, they also created a market bubble that is now bursting. The fallout is global.
- In the U.S., automakers warn that cheap Chinese EVs pose an “extinction-level threat.”
- In Europe, regulators accuse China of market distortion, since Chinese EVs often undercut local rivals on price.
As a result, both the U.S. and EU have imposed tariffs on Chinese EV imports. To bypass these barriers, BYD is investing in local production. Its new factory in Hungary is expected to begin operations by late 2025, allowing BYD to expand in Europe without tariff risks.
In July 2025 alone, BYD sold over 13,000 cars in Europe, surpassing Tesla.
However, analysts caution that even global expansion cannot solve China’s overcrowded domestic market, where cutthroat competition and wafer-thin margins continue to threaten the industry’s long-term stability.
