The bZ3 project, a compact electric sedan aimed at the Chinese market, became a case study in cultural and technical divergence. BYD, a former battery manufacturer turned EV powerhouse, demonstrated a willingness to make bold design and component changes late in the development process—a move that stunned Toyota’s team. This flexibility allowed BYD to iterate quickly, shaving months off traditional timelines. While Toyota emphasized exhaustive testing and refinement, BYD prioritized speed, leveraging its deep expertise in battery technology and vertical integration to push boundaries.
This approach is emblematic of China’s EV industry, where companies like BYD, Xpeng, and Zeekr operate at a pace that leaves legacy automakers scrambling. In China, the world’s largest EV market, competition is fierce, with brands battling not just for market share but for survival. BYD’s ability to roll out vehicles like the Seagull, a sub-$10,000 EV with impressive range, underscores its knack for delivering affordable, tech-packed cars at breakneck speed. In the first half of 2025, BYD reported a 31% sales surge, reaching 2.1 million vehicles, nearly half of which were pure EVs, cementing its dominance.
Toyota’s Reality Check
For Toyota, the bZ3 collaboration was a humbling experience. The company, known for its hybrid dominance with models like the Prius, has been slower to embrace fully electric vehicles. Its cautious approach stems from a belief in diversified powertrains—hybrids, hydrogen, and EVs—rather than an all-in bet on battery electric vehicles. Yet, China’s EV boom, driven by companies like BYD, has forced Toyota to confront the limitations of its strategy. The Chinese market, where EVs and plug-in hybrids account for a growing share of sales, demands agility that Toyota has struggled to match.
Toyota’s chairman, Akio Toyoda, has publicly questioned the environmental benefits of EVs, arguing that nine million electric vehicles have the same environmental impact as 27 million hybrids. This stance reflects Toyota’s long-term commitment to hybrids but also highlights its reluctance to fully pivot to EVs. Meanwhile, BYD’s rapid expansion—both in China and globally, with overseas sales doubling to 464,000 units in the first half of 2025—shows no signs of slowing.
Lessons from China’s EV Playbook
BYD’s edge lies in its vertical integration and battery expertise. As a former battery manufacturer, it controls much of its supply chain, from lithium-iron-phosphate (LFP) batteries to vehicle assembly. This allows BYD to cut costs and accelerate production, a model that has inspired even U.S. automakers like Ford and Tesla to source batteries from Chinese giants like BYD and CATL. Ford’s CEO, Jim Farley, described China’s EV dominance as “the most humbling thing I have ever seen,” echoing Toyota’s sentiments.
China’s broader EV ecosystem also plays a role. The country produces nearly all of the world’s LFP batteries, which are cheaper and more durable than traditional lithium-ion batteries. This supply chain advantage, combined with aggressive price competition, has driven down costs, making EVs like BYD’s Dolphin Surf accessible at prices as low as $26,100 in markets like the UK. In contrast, Toyota’s bZ4X, its flagship EV, starts at a higher price point, reflecting its premium positioning but also its slower adaptation to cost-conscious markets.
A Global Shift in Power
BYD’s influence extends beyond China. In Singapore, it overtook Toyota as the top-selling car brand in early 2025, capturing 20% of the market. In Europe, BYD is flooding the market with models like the Dolphin Surf, priced competitively against budget options like the Dacia Spring. Its megawatt charging technology, which adds 250 miles of range in just five minutes, further showcases its technical prowess. These achievements signal a broader shift, where Chinese automakers are no longer just domestic players but global contenders challenging established brands.
Toyota, for its part, is not standing still. Its U.S. sales in June 2025 showed gains in electrified vehicles, including hybrids and EVs, with 193,248 vehicles sold. Yet, the company faces mounting pressure to adapt. The bZ3 experience has prompted Toyota to rethink its processes, with reports suggesting it is studying BYD’s methods to streamline its own EV development. Whether this will translate into faster, more competitive EVs remains to be seen.
The Road Ahead for Legacy Automakers
The Toyota-BYD partnership underscores a pivotal moment for the auto industry. Legacy automakers, with their deep-rooted traditions and complex supply chains, are being forced to rethink their strategies in the face of China’s EV juggernaut. BYD’s ability to innovate quickly, cut costs, and deliver affordable, high-tech vehicles has set a new benchmark. For Toyota, the challenge is clear: adapt to the speed of the EV revolution or risk being left behind in a market where agility is king.
As the global EV race intensifies, the lessons from this collaboration will resonate far beyond the bZ3. Toyota’s storied reputation for quality remains unmatched, but in a world where speed and affordability are redefining consumer expectations, even the giants must learn to run faster.
