(Bloomberg) -- If you’ve spent most of your life driving an internal-combustion car, pressing down on an EV accelerator for the first time is hard to describe. “It just goes,” says Kevin Wood, who lives in Hampshire, UK, and bought his first electric car last year. Wood, 54, took the leap of faith after discovering he could lease an EV through his employer, securing a tax break in the process.
Then Wood took a second leap of faith: He chose an Atto 3, made by China’s BYD Co. Ten months later, he remains impressed by the SUV’s range, handling, comfortable seats, trunk space and voice-controlled sunroof. Wood calls it “genuinely a lovely car to drive.”
Wood had never heard of BYD before test-driving the Atto — but BYD has its sights set on drivers like Wood. Less than two years after entering the EU and UK markets, the carmaker is pursuing a rapid expansion in both, replete with TV and billboard spots, prime placement at auto shows, and sponsorship of the Euro 2024 football tournament. By the end of next year, BYD plans to double its UK sales and service locations from 60 to 120.
Those ambitions are riling politicians. The EU is considering hitting SAIC Motor Corp., Volvo Car AB parent Geely and BYD with duties of 36.3%, 19.3% and 17%, respectively, on top of the 10% tariff that exporters from China are already subject to. The UK could follow suit. But even without tariffs, companies like BYD face an uphill battle in the region, where EV sales are falling as demand for electric options wanes. Consumers remain EV-skeptical, and there’s evidence that they’re particularly skeptical of cars made in China.
“[Chinese EVs] can have reviews saying that they are actually very good quality,” says Bert Lijnen, an automotive consultant at Nielsen IQ who has researched consumers’ misgivings about China. “But what do you do about this perception about the country?”
Wood’s car choice makes him something of an outlier. Despite outselling Tesla globally in 2023, BYD sold just under 16,000 cars in Europe. It has sold fewer than 4,000 in the UK. Most of the company’s sales still come from China, where BYD prices its EVs aggressively: An Atto 3 goes for about 137,300 yuan ($19,000), while a Seal starts at 179,800 yuan ($25,000) and a no-frills Seagull costs just 72,000 yuan ($10,100).
BYD isn’t pushing the same pricing in the UK and Europe — the Seal, for example, costs just under £46,000 ($60,000) in the UK — but its reputation for cheap cars means would-be buyers are wary. Some 74% of respondents to a recent Bloomberg Intelligence survey expressed concern about buying a Chinese-branded car, citing quality (25%), safety (14%) and Chinese technology (17%).
These brands “must contend with the strong loyalty enjoyed by domestic European brands,” wrote survey authors Michael Dean and Giacomo Reghelin (though even domestic brands are struggling with the slowdown in EV demand).
In a survey of consumers in Belgium, Lijnen found that those least likely to buy a Chinese car most often cited distrust of the country rather than any specific concerns about the vehicles. Part of his research involved showing consumers advertisements for Chinese cars while obscuring their country of origin. The responses were often positive — until the cars were revealed as Chinese.
Get an EV enthusiast behind the wheel of a BYD, though, and many of those reputational concerns dissipate, says Linda Grave, founder of UK-based charging consultancy EV Driver Ltd.
“A lot of people are saying the BYD Seal and the Dolphin are representing exceptionally good value for money, and the build seems to be particularly good,” Grave says. “That whole feeling inside the car… It feels like you get an awful lot for your money.”
Richard Harris, 41, a self-described “petrolhead” turned EV fan from West Sussex in the UK, recently started driving a BYD Seal leased through his employer. He has previously leased an electric Volvo XC40, but Harris was drawn to the Seal’s sporty styling.
“My boss was with me when it got delivered, and he came out and looked at it and he was like, ‘Wow, I’m really impressed,’” he says. “I think it’s opened people’s minds…. I think they’ve been very taken off guard by just how nice it is and the build quality.”
Indeed, stepping from a gas-powered car into a BYD Seal feels more like moving from a steam train to a spaceship than moving from a steam train to a cheaper steam train. The sedan boasts hair-raising acceleration and nifty features like a screen that rotates from portrait to landscape, a windshield speed display, and a panoramic roof. Leather seats and blue suede interior panels give the Seal a plush feeling at odds with the stereotype of Chinese EVs as low-frills.
The Seal’s 300-mile (480-kilometer) range doesn’t hurt. BYD’s Dolphin offers around 250 miles of range, while the Atto 3 boasts 260 miles. All of them have top marks in European safety ratings.
Some of BYD’s fate in the UK and Europe will depend on its future pricing. The US and Canada have slapped tariffs of over 100% on Chinese EVs, effectively eliminating themselves as markets. In the EU, on the other hand, Lijnen says it’s unclear whether BYD and other Chinese brands will absorb the cost of tariffs or pass them on to buyers.
While BYD models aren’t cheap in those markets, they are competitive. On car marketplace AutoTrader, the Seal costs about £45,000 ($56,000) in the UK, £4,000 less than a Tesla Model 3, according to Commercial Director Ian Plummer. Losing that price advantage “might give some problems for people to take the first step and to try something new,” Lijnen says.
But even with a price advantage, BYD may find that improving its reputation among European car buyers is essential to its expansion goals. Over the past 70 years, Japanese and then Korean cars were greeted with skepticism in the bloc — until consumers realized that Toyota and Kia were making decent cars. Today, a quarter of new cars sold in Europe come from an Asian brand.
BYD could also benefit from the rapidly evolving EV landscape, in which it joins other upstart carmakers and a slew of new model names from established marques. Many consumers no longer clock which companies or countries are behind which vehicles: Land Rover is owned by an Indian company, MG is now Chinese, Vauxhall is French and many Teslas are built in China.
“Most people don’t think about it that much and they aren’t that aware,” Plummer says. “I think if the product is good and the brand is something that they can find a connection with, then that overcomes the origin.”
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