BYD is expanding its identity beyond automaker to major battery supplier, with external battery sales reaching over 20% of total installations in the first three quarters of 2025, a significant shift for the company as its vehicle sales growth slows.

The Shenzhen-based company's battery business delivered 23.65 gigawatt-hours to external clients domestically in the first nine months of 2025, representing 20.85% of its total domestic battery installations of 113.42 GWh, according to data from Gaogong Lithium Battery Industry Research Institute. That marks more than a doubling from under 10% at the end of 2024.

The battery expansion comes as BYD's vehicle sales momentum weakens. While the company sold 3.26 million new energy vehicles in the first three quarters, up 18.6% year-over-year, third-quarter sales fell 1.82% to 1.11 million units. In September, BYD cut its full-year sales target to 4.6 million vehicles from 5.5 million, a reduction of 900,000 units.

The divergence underscores BYD's strategic pivot from a closed-loop manufacturer to an open battery supplier competing directly with Contemporary Amperex Technology Co. Ltd., the world's largest battery maker.

Strategic Evolution from Closed to Open

BYD's transition to external battery supply represents a three-decade evolution from its closed production model. Founded in 1995, the company initially focused on consumer batteries before entering the automotive sector in 2003, maintaining an internal "vehicle-battery" circulation system.

The turning point came in 2017 when CATL surpassed BYD in domestic battery installations, prompting BYD to open its battery business in 2018. The company first targeted commercial vehicle manufacturers including Dongfeng Motor Corp. and Zoomlion Heavy Industry Science & Technology Co. , before expanding to passenger vehicles through a partnership with Chongqing Changan Automobile Co.

The establishment of FinDreams Battery Co. in 2019 marked formal independence of the battery operation. However, concerns among automakers about sharing supply chains with a competitor limited growth, keeping external supply below 10% for several years.

The breakthrough arrived in 2024 with major partnerships including Nio Inc.'s Onvo L60 adopting BYD's blade battery, a supply agreement with Tesla Inc. for its Shanghai energy storage factory, and collaboration with Xiaomi Corp. for the SU7 and YU7 models. The Xiaomi SU7 exceeded 20,000 monthly sales, becoming a flagship external supply case.

Client Portfolio Expansion

BYD's 2025 external supply surge reflects both volume growth and client diversification. Major customers include XPeng Inc., Xiaomi, and Nio among new energy vehicle startups, alongside traditional manufacturers.

The client roster now spans passenger vehicles including Tesla's Berlin-made Model Y base version, Xiaomi SU7 standard range, Nio Onvo L60, Mercedes-Benz GLC350eL plug-in hybrid, and Audi Q6L e-tron lithium iron phosphate version. Commercial vehicle partnerships include BAIC Foton Motor Co., XCMG Construction Machinery Co. , JAC Motors, and Weichai New Energy Commercial Vehicles.

Beyond simple supply relationships, BYD pursues deep integration through joint ventures. The company established a battery factory with China FAW Group Corp. specifically for FAW Toyota bZ3 and Hongqi E-QM5 models, while customizing blade batteries for Tesla's Berlin production line. This localized, tailored approach builds long-term strategic partnerships.

Overseas Growth Accelerates

International markets represent BYD's growth frontier. The company exported 701,600 vehicles in the first three quarters of 2025, surging 132% year-over-year to comprise 21.5% of total sales. Battery exports grew even faster at 77.1%, outpacing the industry average.

Europe emerged as BYD's breakthrough market. According to SNE Research data, BYD's global electric vehicle battery usage reached 145.0 GWh in the first three quarters, ranking second globally with 45.6% growth. European battery usage hit 10.3 GWh, soaring 246.2% year-over-year, making it BYD's largest overseas battery market with Tesla as a major contributor.

BYD is building a battery factory in Hungary to accelerate European market integration through localized production. The facility aims to provide more convenient battery supply for European automakers while reducing tariff costs and delivery times, critical factors for securing orders given Europe's stringent supply chain localization requirements.

The company is also expanding in Southeast Asia and South America, providing battery solutions for small electric vehicles and partnering with commercial vehicle manufacturers on electric trucks and buses.

Competition and Market Outlook

Despite progress, BYD faces formidable competition from CATL, which maintained 42.75% domestic market share with 210.67 GWh installations in the first three quarters of 2025, nearly double BYD's 22.57%. CATL holds stronger positions in overseas markets through established relationships with Tesla, BMW AG, and Volkswagen AG.

Second-tier battery makers are also intensifying competition. In the first three quarters of 2025, CALB Co. Ltd.'s battery exports grew 37.2%, Gotion High-Tech Co. Ltd. increased 17.7%, and Svolt Energy Technology Co. surged 171.7%, potentially diverting external supply orders.

Supply chain management and capacity planning present additional challenges. BYD must ensure stable battery production while managing raw material price volatility for lithium, cobalt, and nickel that directly impacts production costs and profitability.

Market opportunities remain substantial. The International Energy Agency projects global new energy vehicle annual sales must reach approximately 45 million units by 2030 to meet carbon neutrality goals, triple 2023 volumes. Based on this trajectory, global battery demand could reach 3,500 GWh by 2030, providing expansive growth potential for BYD's battery business.