China’s BYD has emerged as one of the most consequential companies in the global automotive transition. Once known primarily as a battery producer, it is now the world’s largest seller of battery-electric vehicles and a major producer of plug-in hybrids, batteries, and energy-storage systems. BYD’s combination of low-cost vehicles, technological innovation, and control over much of its supply chain has helped it expand rapidly beyond China.
BYD’s growing interest in Canada presents both an opportunity and a policy challenge. Canadian consumers could gain access to more affordable electric vehicles (EVs), while investment could create jobs and strengthen parts of the domestic supply chain. But BYD’s business model raises serious questions about technology transfer, labour practices, data security, market access and the future competitiveness of Canada’s automotive industry.
Canadian policymakers must ask not only if BYD should be permitted to invest, but rather, what does Canada want from such a partnership and is BYD willing and able, under Chinese law, to provide that?
In this APF Canada Explainer, the first in a series about Chinese companies interested in Canada’s manufacturing sector, our authors explore other key questions around BYD and its aspirations for international expansion.
What is BYD?
BYD — originally an abbreviation of “Build Your Dreams” — was founded in Shenzhen, China, in 1994 as a rechargeable-battery manufacturer. It entered the automotive sector in 2003 and gradually expanded into battery-electric vehicles, plug-in hybrids, electric buses and commercial vehicles.
In 2025, BYD overtook Tesla in annual sales of fully electric vehicles, selling approximately 2.26 million battery-electric vehicles compared with Tesla’s 1.64 million deliveries. BYD sold more than 4.6 million new-energy vehicles overall when plug-in hybrids were included, making it one of the world’s largest automakers by sales volume.
The company’s rise is significant not simply because of the number of vehicles it produces. BYD has developed capabilities across batteries, semiconductors, vehicle platforms, software, manufacturing, and energy storage. It is therefore better understood as an integrated clean-technology and mobility company than as a conventional automaker alone.
How did BYD become a leader in EV production?
BYD’s successful growth is the result of three interrelated factors.
- Sustained Industrial Policy
Beginning in the late 2000s, Beijing identified new-energy vehicles as a strategic emerging industry. National and local governments supported the sector through consumer subsidies, tax incentives, government procurement, research funding, industrial policy, charging infrastructure, and preferential treatment for domestic producers.
These policies helped foster a dense domestic manufacturing ecosystem connecting mineral processing, battery production, components, vehicle assembly, and charging infrastructure that facilitated rapid iteration. Concentrating supplier networks within China’s borders enables real-time interaction between manufacturers, designers, and software developers, reducing design-to-market time by roughly one-third. This is an advantage for BYD that is proving difficult to replicate globally.
However, Chinese government support for the EV ecosystem alone does not fully explain BYD’s success. Competition within China’s crowded automotive market has also forced companies to innovate rapidly and lower prices. But the scale, duration, and co-ordination of China’s industrial policies provided conditions that automakers in most other countries did not enjoy.
- Vertical integration
Most EV makers depend heavily on external suppliers for batteries, semiconductors, and other critical components. BYD produces many of these inputs itself. Its operations extend across battery cells, battery packs, power electronics, vehicle semiconductors, electric motors, and vehicle assembly. It is also pursuing access to upstream mineral resources. This integration is distinctive among most of its Chinese competitors, though Geely has begun comparable in-house battery development.
Vertical integration provides greater control over costs, production schedules, and technological development. BYD can redesign components across the vehicle rather than negotiating changes with multiple suppliers and faces less exposure to supply disruptions and mark-ups. However, vertical integration requires large and sustained investment in research, manufacturing capacity, and supply-chain management. But at BYD’s scale, the model has helped it compete aggressively on price while continuing to introduce new products for a broad range of price points.
- Batteries
BYD began as a battery company, and batteries remain central to its competitive advantage, not only in its own EV lines, but as a separate revenue stream and source of market influence.
BYD's dominance in lithium iron phosphate (or LFP) batteries exemplifies this approach. LFP batteries generally cost less and rely on more widely available inputs than battery chemistries containing large amounts of nickel and cobalt. They also offer advantages in durability and thermal stability, although they have historically had lower energy density than some competing chemistries.
BYD’s battery advantage extends into charging infrastructure. In 2025, BYD unveiled a high-powered charging system that it said could add hundreds of kilometres of driving range in minutes and is involved in vehicle-to-grid projects, which allow EVs to return electricity to the grid. While unproven at scale, these innovations position BYD to influence the trajectory of global EV markets and sustain its competitive edge.
How does BYD approach international partnerships?
BYD’s international expansion has often proceeded in stages, although the sequence can vary by market. The company has established or announced production facilities across Southeast Asia, Central Asia, Latin America, and Europe, specifically in Brazil, Hungary, Indonesia, Thailand, and Uzbekistan.
In several countries, the company first established a presence through electric buses or other commercial vehicles, building relationships with local authorities and demonstrating its technology before expanding further.
Passenger-vehicle sales are frequently developed through local distributors and dealer partners. BYD has used this model in markets including Greece, Thailand, and parts of the Caribbean, relying on established firms to provide sales, service, and local market knowledge while building the BYD brand and dealership network.
Local manufacturing has generally followed market entry or accompanied a broader localization strategy. In Thailand, BYD began selling passenger vehicles through its local distributor in 2022 before opening a factory in Rayong in 2024. In Uzbekistan, passenger-vehicle sales and service centres were established before local production began through a joint venture with UzAuto.
Does BYD transfer technology to its overseas partners?
The evidence to date is limited and mixed.
Local assembly does not necessarily provide the host country with access to its most valuable technology. A plant may create employment and supplier opportunities while the vehicle platform, battery design, software, and intellectual property remain controlled by BYD.
BYD’s plant in Thailand (operational since 2024) focuses on assembly and producing select components. EVs from the Brazil plant are similarly assembled from imported components. When Brazil eliminated tariffs on vehicle kits, BYD responded by targeting 50 per cent local content by 2027, but how this will affect technology transfers is unclear.
BYD’s ability to transfer technology may further be constrained by Chinese regulations. The Regulations on Outbound Investment, which come into force July 1, 2026, impose sweeping scrutiny on transfers with national security implications — which likely include batteries.
For countries seeking to develop their own industrial capabilities, this distinction is important. Assembly, local procurement, engineering collaboration, research and development, intellectual-property rights, and independent access to suppliers represent different levels of economic value. Governments must negotiate these elements directly rather than assume that technology transfer will follow automatically from local production.
What could BYD investment realistically offer Canada?
- Affordability
The most immediate potential benefit is greater consumer choice. BYD has demonstrated an ability to produce capable EVs at prices below many North American and European competitors. Its entry could put pressure on other manufacturers to reduce prices and accelerate the introduction of lower-cost models.
- Industrial Development
Investment by Chinese EV companies such as BYD has the potential to revitalize Canada’s flagging auto industry, but this requires intentional negotiation and clear conditions.
First, because BYD controls much of its own supply chain, it has fewer incentives to develop Canadian suppliers or share important technology. Without careful negotiation and monitoring for compliance, a factory could be majority Canadian-owned on paper while remaining dependent on BYD for batteries, software, platforms, components, and engineering knowledge. Brazil's experience may be instructive: BYD committed to 50 per cent localization only after tariff exemptions on imported car kits were eliminated.
Second, Chinese laws mandate government approval before strategically important technology can be transferred outside the country. Canada would need to negotiate what technology transfer is feasible within these limits and identify where Chinese approval requirements become deal-breakers.
Third, market access. Canada’s automotive sector is deeply integrated with the United States, which purchases more than 90 per cent of Canadian-made vehicles. U.S. restrictions on Chinese-connected vehicle software and hardware could prevent a BYD vehicle assembled in Canada from entering the American market.
Without access to the U.S. market, a Canadian EV plant dependent primarily on the relatively small domestic market or on exports to third countries, many of which have introduced their own trade measures affecting Chinese EVs.
- Employment
A Canadian manufacturing operation could also create construction and assembly jobs, generate orders for domestic suppliers and make use of underutilized industrial capacity. However, the number and the quality of those jobs would depend highly on the scope of BYD’s operations.
Distinguishing between manufacturing and assembly will be key. Assembly plants using imported “car kits” can eliminate thousands of jobs, while manufacturing using local supply chains creates more resilient employment.
While Canada's Minister of Industry rejected such arrangements, this policy should be formalized through binding investment conditions and enforcement mechanisms, such as import tariff restrictions. Canada must also identify and invest in high-value supply chain segments where it has competitive advantage: critical mineral processing, battery engineering, and advanced manufacturing. This ensures BYD investment delivers genuine industrial benefits rather than low-value assembly.
What safeguards must be in place before considering BYD investment?
BYD’s rise reflects genuine industrial and technological achievement. Its vehicles could offer benefits to Canadian consumers, and a well-designed investment could potentially support Canadian employment and industrial development. But realizing these benefits requires establishing clear safeguards across four critical areas.
- Business Structure & Market Viability
Chinese automotive investment could affect Canada’s relationships with existing partners. Japanese automakers have built substantial Canadian assembly operations, while South Korean firms have invested heavily in battery and critical-mineral projects. Ottawa first must assess how integration with Chinese automotive platforms could complicate these investments or the viability of the U.S. market for BYD cars assembled in Canada.
Additionally, investment deals should include establishing:
- Meaningful Canadian ownership and governance rights;
- Enforceable Canadian-content requirements, including complementary restrictions or tariffs on car kits;
- Integration of Canadian suppliers;
- Domestic research, engineering, and workforce development, and;
- Clear arrangements governing intellectual property and technology access.
- Labour Standards
Construction of BYD's factories in both Brazil and Hungary has drawn significant scrutiny for alleged labour rights violations. In December 2024, Brazilian labour authorities found that Chinese workers employed by a BYD contractor were working in “slavery-like” conditions. BYD told Reuters that BYD “had cut ties with the firm that hired the workers, added it is collaborating with authorities and providing assistance to the workers.”
Hungarian authorities are investigating similar concerns and are reported to be sanctioning three firms responsible for building BYD’s factory in Szeged, Hungary.
The Chinese government appears increasingly aware of these risks. In December 2025, the Ministry of Commerce issued non-binding guidelines urging Chinese companies operating abroad to comply with host-country labour laws and regulations.
BYD's track record suggests that Canada must find ways to leverage this commitment in enforcing its own robust labour protections, such as through:
- Traceability of minerals, components, and contractors;
- Compliance with Canadian labour and forced-labour laws, and;
- Whistleblower protections for private-sector actors.
- Privacy & Data Protection
Modern EVs collect location, diagnostic, and behavioural data and receive remote software updates. Transferring this data to China presents documented national security concerns, given that Chinese companies operate under strict government oversight and data-sharing obligations.
Both Canada and China have laws restricting the flow of data across borders without government approval and in some cases, personal consent. A joint venture could face conflicting legal obligations: Chinese law may assert ownership over vehicle data, while Canadian law restricts its movement.
The federal government, with jurisdiction over international trade and national security, is better positioned than individual provinces to negotiate conditions including:
- Canadian ownership of vehicle data and restrictions on transfer to China;
- Security reviews of software, communications systems, and remote updates, and;
- Technical controls on data storage, source-code access, and equipment.
- Civil Rights
BYD has pursued aggressive legal action against critics, including a lawsuit against a U.S. industry association that incurred significant legal costs to have the case dismissed. In China, BYD has also taken legal action against online commentators and media figures and has offered rewards for information about alleged efforts to damage its reputation. Other Chinese automakers have adopted similar approaches in an increasingly competitive domestic market.
While companies have a legitimate interest in responding to false claims, this pattern of aggressive litigation raises governance concerns when a firm expands into countries with strong expectations of media freedom, independent research, and open public debate.
Federal and provincial governments would need to consider how BYD would operate within its norms around speech, criticism, and the ability of civil society organizations to comment on corporate conduct without facing costly legal challenges. Four provinces have laws protecting defendants from Strategic Litigation Against Public Participation (SLAPP). Other provinces would need to consider similar protections.
