Outsourcing credit lets the Chinese EV maker scale fast while leaving asset risks to lenders.
This article appears in the July/August issue of Global Finance Magazine.
Walk the streets of cities like Valencia or Paris, and you don’t need the data to see BYD everywhere, especially in ride-hailing fleets and private transportation. These days, the sleek logo you notice isn’t always Tesla’s or Kia’s; it’s often BYD’s.
Sales of BYD’s electric vehicles surged across Europe last year, up roughly 270% year over year. In the first quarter of 2026, sales increased by another 156%.
While most coverage frames this as a product story, the bigger story is financing: BYD’s rise has less to do with design or price than with how the cars are financed.
BYD hasn’t expanded in Europe by building a traditional captive-finance arm. Instead, it has plugged directly into the region’s existing banking and leasing infrastructure, achieving captive-finance reach without the balance-sheet burden. In doing so, it has turned Europe’s financial system into a distribution engine that moves vehicles by turning them into financeable assets.
At first glance, BYD’s success seems straightforward: strong demand, rapid adoption, and a new entrant quickly gaining share. But in a market where vehicles are often financed, leased, and cycled through multiple channels before reaching long-term ownership, the headline numbers don’t always tell the whole story. The surge in European BYD registrations may signal demand and financing strength, or it may reflect window dressing shaped by the way the system works.
BYD relies on a familiar but strategically deployed set of financing and leasing arrangements. Vehicles are sold in bulk to leasing companies, fleet operators, and dealer networks, which then finance or lease them to end users, including corporate clients, ride-hailing drivers, and private buyers. European banks and auto-finance platforms provide the underlying credit, while leasing firms structure contracts and manage residual-value assumptions.
What stands out in BYD’s case is the speed and scale of the operation.
“European OEMs [original equipment manufacturers] built their captive finance arms over 30 to 40 years, and those businesses now function as profit centers,” says Stefan Bratzel, founder and executive director of the Center of Automotive Management (CAM) in Bergisch Gladbach, Germany. “BYD cannot replicate this overnight, nor does it try to.”
Instead, he notes, the company is partnering with established asset finance providers to accelerate market entry. BYD gains “speed to market at the cost of margin while it accumulates the balance sheet and regulatory standing to eventually internalize these functions.”
In effect, BYD is compressing a decades-long buildout of captive finance into a partner-led model, trading margin and control for faster access to Europe’s credit and leasing channels.
It’s easy to see the appeal for lenders: Vehicles placed into leasing or fleet programs become financeable units, bundled into loan or lease portfolios that generate predictable cash flow. In a market where electrification is both a policy priority and an investment theme, high-volume EV programs provide a steady pipeline of assets.
The speed of BYD’s expansion raises questions about the numbers.
“BYD’s channel mix is improving,” says Matthias Schmidt, an independent analyst tracking the European auto market. Retail share in Germany rose to 32.5% of volume in the first four months of 2026, compared with 12.4% for all of last year, suggesting a shift toward a more balanced sales mix. But the relationship between registrations and vehicles actually on the road is less straightforward.
“Out of more than 30,472 BYD models registered in Germany since it entered the market in December 2022, only 18,536 are currently on the road,” says Schmidt, suggesting that “after models have been registered, they are then being exported to other European markets as used-car inventory or are going back into used-car inventory in Germany. This could be a strategy to demonstrate to market observers that they are performing better in Europe’s largest market than they actually are. We call it window-dressing the data.”
In a system driven by leasing, fleet placement, and dealer networks, that gap is not necessarily unusual. Vehicles can be registered into the channel before reaching long-term ownership, then repositioned through resale, export, or short-term use across markets. For financial stakeholders, the distinction matters: registrations may signal momentum, but they do not necessarily show sustained demand.
For the institutions partnering with BYD and helping fund its expansion, the focus is less on BYD’s near-term concern — speed to market — and more on how those assets perform over time.
Residual value assumptions underpin the economics of leasing. If vehicles retain value, the system works: Monthly payments remain competitive, credit risk remains contained, and lenders and leasing firms can recycle assets efficiently through secondary markets. When they don’t, the economics tighten quickly.
“The EV residual value question is the single biggest structural challenge in automotive finance right now,” Bratzel says. “Whoever solves that problem credibly — either through data, scale, or balance sheet — will have a significant structural advantage.”
Bratzel points to one potential factor that could shape how banks ultimately price that risk: “Vertical integration around the battery — especially battery cells — can have a positive impact on risk assessments, as this is based on a lot of their own data.”
BYD’s advantage stems in part from how much of that data it controls. Unlike many automakers that rely on third-party suppliers for critical components, the company produces its own battery cells and key parts of the EV supply chain. That level of vertical integration gives BYD clearer visibility into battery performance over time, arguably the most important variable in determining how an electric vehicle depreciates.
The geographic distribution of BYD’s growth in Europe adds another layer.
According to Schmidt, roughly 70% of Chinese EV registrations in Western Europe in the first quarter of this year were concentrated in Spain, Italy, and the U.K.: markets that tend to be more price-sensitive and open to new entrants.
While this doesn’t invalidate BYD’s growth, it suggests that location-dependent finance dynamics are driving expansion as much as consumer demand.
| Traditional OEM Captive Finance |
BYD Partner-Led Model |
|---|---|
| Builds and operates own finance arm |
Uses banks and leasing partners |
| Significant capital commitment |
Lower capital burden |
| Controls lending and leasing directly |
Outsources financing functions |
| Often takes decades to build |
Can scale immediately |
| Retains finance profits | Trades margin for speed |
| Higher control | Faster market entry |
BYD’s approach is working. It has outsourced the slowest component of automotive expansion — credit formation — while maintaining control of product supply and commercial momentum.
As Bratzel suggests, this is not a permanent structure: It’s transitional. It’s designed to gain scale first, then possibly internalize financing over time. Meanwhile, European banks and leasing platforms are providing balance-sheet support to enable growth.
Schmidt’s analysis leaves little ambiguity: Not all growth is created equal. Registration data may reflect momentum, but it can also reflect channel dynamics — fleet placements, dealer inventory, cross-border repositioning — that cloud actual on-the-ground demand.
For lenders, the distinction is not academic. They are not underwriting registrations. They are underwriting residual values, which is where the rubber meets the road.
Over the next two to three years, vehicles deployed and financed today will begin to cycle back through the system via lease returns, resale markets, and secondary channels. At that point, the assumptions that anchor today’s financial models will be tested against real-world market conditions.
But the next phase will be less about volume. It will instead focus on testing the model that facilitated BYD’s rapid entry into Europe. If BYD’s vehicles hold their value, the company’s partner-led model will look less like a workaround and more like a fast-track version of what legacy automakers spent decades building. If residual values weaken, or if too much of the growth proves channel-driven rather than demand-driven, the financing engine that built BYD’s presence could become a constraint.
That’s the real question for banks: Can the vehicles BYD has placed in Europe retain their value once they return to the market? Because in a financing-driven system, growth can be engineered, but asset performance determines whether it lasts.
Rocco Pendola is a contributing writer based in Spain.
Although increasingly limited, China’s dependencies on the EU in strategic technologies have not disappeared.
In today’s increasingly tense geopolitical environment, closing this gap has become an urgent priority for Beijing. The country’s 15th Five-Year Plan, unveiled last March, places technological self-reliance at the heart of its industrial strategy through 2030.
In semiconductors, aerospace technologies, pharmaceuticals, automotive chips, robotics and quantum computing, European companies still supply products that remain essential to China.
As trade tensions with Beijing intensify, could these dependencies give Europe leverage? Most experts are sceptical. China’s monopoly over rare earths — essential for Europe’s green technologies and defence industry — is a far more powerful weapon that could be used in retaliation against the EU.
“China really has a choke point when it comes to minerals, but we don’t have an equivalent choke point, which is very powerful,” Tobias Gehrke, an expert at the European Council on Foreign Relations, told Euronews.
In some sectors, China may achieve self-reliance within just a few years, according to expert Sam Goodman in a report published in May for the Brussels-based Martens Centre.
Euronews examined those sectors. Here are the technologies in which China still remains dependent on the EU.
In the semiconductor supply chain, the EU has a jewel : ASML, the Dutch company with the highest market valuation ever recorded by a European company, boasting a market capitalization of more than €630 billion in 2026.
The company holds a near-monopoly on extreme ultraviolet (EUV) lithography machines, which are essential for manufacturing advanced semiconductor chips used in artificial intelligence and electric vehicles.
China’s dependence on ASML has already been exploited by the United States and the Netherlands, which have restricted sales of the strategic technology to Beijing. But China can still buy less advanced deep ultraviolet lithography machines, a segment in which ASML holds almost 90% of the global market, according to Gehrke. In 2024, for some of those products, up to 70% of shipments went to China.
However, China is moving quickly to catch up. It now requires that 50% of equipment used in new chip production capacity be sourced domestically, Gehrke wrote in a report published in March.
“The Chinese have set a target that they want to start producing their own chips, not using ASML machines by 2028,” Goodman told Euronews. “But they’re still going to be dependent on ASML to learn.”
Maintenance and repair of installed equipment in China also account for a significant share of EU suppliers’ revenues.
In the event of EU restrictions on semiconductor exports, Gehrke forecasts “potentially large” economic damage to China, particularly if servicing were restricted, “but great spill-over risks,” as a significant share of ASML’s revenue is exposed.
The Comac C919 narrow-body airliner is China’s answer to the widely used passenger jets produced by U.S. manufacturer Boeing and European rival Airbus. But its supply chain remains heavily dependent on European companies.
Goodman lists several of them, including France’s Safran, which produces its engine, Germany’s Liebherr Aerospace, which supplies its cabin pressure system, and Italy’s Avio Aero, which manufactures the engine casing.
“Without the participation of these companies, China wouldn’t have a civil aviation programme,” Goodman said. “Civil aviation is very complicated to begin with, with safety standards very high; it takes a long time to get the know-how needed to do it.”
However, despite China’s dependence on European suppliers, any attempt to weaponise the supply chain could also come at a cost for Europe.
“It will hurt the bottom line of European aerospace suppliers which do very well out of China,” Goodman told Euronews. But he argues that the alternative is to “accept basically that China learn all our technology, create rivals and then destroy our market share”.
Competition between Chinese and European manufacturers is already intense.
A quiet battle is emerging over certification, with China seeking approval from the European Union Aviation Safety Agency (EASA) to allow the C919 to operate in Europe.
“This is a leverage for Europe which could politicise the process and refuse China’s aircraft certification”, Gehrke said. But Beijing is already playing the same game, slowing down the certification of new Airbus aircraft in China.
As of now, Airbus has more than 2,200 aircraft in service in mainland China, holding roughly a 55% market share.
Europe still leads China in pharmaceutical patents. “In 2024, companies in Italy, Germany and France alone had double the number of pharmaceutical patents granted compared to China,” Goodman said.
The expert added that EU companies continue to dominate the vaccine market, with Germany’s Merck, France’s Sanofi and Britain’s GSK “accounting for 51 percent of global vaccine market share in 2024″.
However, according to figures from LEEM, the French pharmaceutical industry association, China’s R&D investment grew by 16.2% annually between 2020 and 2024—twice the pace of Europe—allowing it to account for more than one-third of new molecules produced by global pharmaceutical research in 2024.
Some EU companies have also established joint ventures and R&D partnerships to benefit from China’s research spending and lower manufacturing costs, including Germany’s Bayer and France’s Sanofi.
Which side benefits the most from joint ventures? “Always China,” Goodman said. “I’ve found no example of a joint venture between a Chinese company and a non-Chinese company where the non-Chinese company has benefited from technology transfer.”
When it comes to medical equipment, EU companies such as Siemens Healthineers and Philips remain global leaders in magnetic resonance imaging (MRI), although both have significantly expanded their manufacturing footprint in China.
“Local competitors are catching up rapidly,” Gehrke said, but he added that “there is still a gap in key upstream MRI components – such as superconducting magnets and image-processing software.”
Chinese flagship automakers such as BYD and Chery also depend on European technologies, including chips from Germany’s Infineon, the Netherlands’ NXP and Franco-Italian STMicroelectronics.
China’s strategy is to become self-reliant in the sector, but Goodman said that the “domestic demand for EVs and the chips within them has meant that automotive companies in the PRC [People’s Republic of China] face an import substitution challenge”.
But the EU’s leadership in these niche technologies remains precarious.
“Europe is strong in mature automotive chips because they do produce power electronics sensors, but there are still very high vulnerabilities in certain parts of the supply chains, mainly in the back-end manufacturing part,” Giulia Albini from CLEPA, the European Association of Automotive Suppliers, told Euronews.
The EU depends on other regions—including China—for packaging, assembly and testing, as last year’s dispute over Dutch-based Nexperia, owned by China’s Wingtech, revealed. Following the Netherlands’ takeover of the company, China restricted chip exports to the EU.
Goodman added that the significant share of Chinese customers, as well as EU carmakers operating in China, makes it “unlikely that this leverage could be utilised”.
Robots are China’s latest showcase of technological progress. Few will forget Chinese humanoid robots taking centre stage during televised Lunar New Year celebrations.
But Goodman said that a sizeable portion of the downstream supply chain, including the components that make the robots move, is produced by European companies, including Sweden’s Ewellix and Germany’s Rexroth.
“The leading Chinese humanoid robotic companies do not publish their supply chain for this very reason,” Goodman said.
However, he added that, in any case, the narrative of a self-sufficient Chinese humanoid robot sector “ready to take the world by storm” should be examined carefully.
When it comes to quantum computing, designed to carry out complex calculations faster than classical computers, Goodman said that China wants to keep working with Europeans to meet its industrial and commercialisation targets.
However, EU member states remain divided over the merits of partnering with China in what is regarded as the next major technological frontier after the AI boom.
“The French, the Dutch, the Germans have very rigorous export controls on materials that could be used for quantum computing by China, while the Spanish and the Italian have active projects with Chinese companies developing quantum in Europe,” Goodman said.
“Unless we have a unified approach, inevitably China is going to gain the system.”
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The lithium industry is growing more optimistic about a market recovery as accelerating demand for battery storage systems helps offset a slowdown in electric vehicles, leading producers said this week at a key industry conference, Reuters reported.
“The period of market overcorrection is over. Energy
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Ferrari has announced that Enrico Galliera, its chief marketing and commercial officer of more than 16 years, will step down, handing one of the most sensitive jobs in the luxury car world to an outsider.
His successor, Massimiliano Di Silvestre, the former head of BMW’s Italian business, takes over on 1 July and will report directly to CEO Benedetto Vigna.
Galliera’s exit comes barely a month after Ferrari pulled the covers off the Luce, its first fully electric model, which received a reception few at the company were happy about.
The car, whose edgeless styling was developed with LoveFrom, the design studio founded by former Apple design chief Jony Ive, broke sharply from Ferrari’s traditional look and drew swift ridicule from enthusiasts and investors alike.
The backlash was unusually public for a brand accustomed to adoration.
Ferrari’s shares fell more than 8% in a single session after the reveal, a sharp market verdict on one of the industry’s most valuable names.
Critics lined up to attack the design, among them the company’s own former chairman, Luca Cordero di Montezemolo, who warned that the brand was risking the destruction of a legend and went so far as to suggest the famous badge be removed from the car.
Italy’s deputy prime minister, Matteo Salvini, joined in, questioning the four-door model’s price, which starts at €550,000.
However, Ferrari has firmly rejected any link between the criticism and Galliera’s departure.
According to the company, he had decided to move on some time ago and agreed to remain in place through the Luce launch before pursuing what it described as a new chapter in his career.
Vigna praised his contribution and framed the change as part of the brand’s evolution rather than a reaction to it.
Whatever the motivation, the choice of replacement is telling.
Di Silvestre brings more than two decades of experience in the premium car market, having steered BMW Italy since 2019, and represents a rare move by Ferrari to recruit its commercial chief from a rival rather than promote from within.
He inherits the task of selling an electric Ferrari to a clientele that pays a heavy premium for exclusivity, at a moment when demand for high-performance EVs has cooled.
Ferrari maintains that interest in the Luce remains strong, though investors will not get a clearer picture until the company reports its second-quarter results on 30 July.
The EU’s new car market maintained steady growth through the first four months of 2026, with nearly 3.8 million vehicles registered, up 4.2% from the same period in 2025. This is according to data published on Wednesday by the European Automobile Manufacturers’ Association (ACEA).
The figures show a market increasingly dominated by electric and hybrid vehicles, helped by government incentives in major economies and growing competition from Chinese carmakers.
According to ACEA, between January and April 2026, battery-electric cars accounted for 19.7% of the EU market, up from 15.3% a year earlier. Growth was mainly driven by the bloc’s four largest markets, with Italy (+25.5%), Spain (+19.7%), Germany (+6.6%) and France (+2.3%) all recording gains.
In April alone, sales of battery electric vehicles were up by 37.7% in the EU from the same month last year, lifting their market share to 20.6% for the month.
Hybrid-electric vehicles remained the most popular single powertrain choice in April, up 12%, accounting for roughly 36.9% of the month’s sales.
Plug-in hybrids added 16.4%, capturing roughly a 9.8% share in April registrations.
On the other side of the ledger, petrol car registrations fell 16.3% to fewer than 218,500 units, while diesel dropped 17.1% to around 74,000.
Together, petrol and diesel cars accounted for less than 30% of vehicles sold across the EU in April.
Volkswagen Group retained its position as the bloc’s largest carmaker in the first four months of 2026, accounting for 26.7% of all new registrations, with just over one million units sold, up 2.9% year-on-year.
However, performance varied across the group. Skoda registrations rose 15.5%, and Audi gained 8.6%, while the core Volkswagen brand slipped 3.2%, losing ground across multiple segments.
Stellantis ranked second with a 17.1% market share and over 648,000 units, up a robust 7.8%, driven by a recovery at Fiat of over 32%, and strong gains at Opel and Vauxhall, which together rose 22% in registrations.
Renault Group was the weakest performer in the top three, declining 7.4% to around 384,250 units and accounting for a 10.1% market share, with Dacia registering a particularly sharp fall of more than 15%.
BMW Group and Mercedes-Benz posted gains of 3.9% and 3.8%, respectively, while Toyota and Hyundai Group both recorded modest declines of between 2.5% and 3.1%.
The most significant trend in April’s data was the continued rise of Chinese carmakers.
According to ACEA figures, BYD’s EU registrations more than doubled year-on-year in the first four months of 2026, surging 152.9% to more than 71,850 units.
Chery Automobile, through its Omoda, Jaecoo and Jetour brands, grew 267.1% to more than 48,350 units, while Leapmotor, distributing through its joint venture with Stellantis, soared 558.8% to over 28,700 units.
SAIC Motor, owner of the MG brand and the largest Chinese group by EU volume, added a further 10.4% to reach more than 77,000 units.
Combined, Chinese brands accounted for around 6% of EU car registrations between January and April 2026, compared with 3.2% in the same period a year earlier. Across the wider European market, including the UK and EFTA countries, Chinese brands accounted for a combined market share of roughly 7.3% over the same period, up from 3.7% a year earlier.