On October 7, 2026, BYD Executive Vice President and Head of International Business Li Ke publicly stated at the Singapore Milken Asia Summit that BYD plans to surpass Toyota and Volkswagen within the next five years to become the world's largest automobile manufacturer. This is not a temporary slogan; Chairman Wang Chuanfu of BYD has already clearly outlined the plan to "become the largest car manufacturer by scale within five years" at the shareholder meeting in June 2026. Li Ke subsequently further emphasized that this goal will be achieved solely through organic growth, relying neither on the US market nor driving sales through acquiring car companies.

Looking at the current volume gap, Toyota's global sales in 2025 were approximately 11.32 million units, Volkswagen's about 8.98 million units, and BYD ranked sixth with 4.6 million units. In the first half of 2026, Toyota sold 5.39 million units, while BYD's sales for the same period were 1.81 million. The volume gap is still close to three times. To catch up within five years, BYD needs to add over 1 million units in sales annually, making the challenge extremely difficult. However, growth momentum is the core variable: Among the top 10 global carmakers, Toyota's recent compound annual growth rate was only 0.4%, and Volkswagen even declined by 1.3%, while BYD is the fastest-growing automaker. The industry generally believes it is basically unquestionable that BYD will surpass Stellantis, GM, and Hyundai-Kia within two to three years. It is highly feasible for BYD to surpass Volkswagen to become the second largest globally within five years, and whether it can finally catch up to Toyota depends on the future trajectory of the global market.

BYD has clearly stated it will temporarily not enter the US passenger car market, instead shifting its focus to Europe and emerging markets. Factories in Thailand and Uzbekistan are already in production, the Hungary factory is set for mass production in the fourth quarter, and factories in Brazil and Indonesia are also under construction. In September 2026, BYD's overseas monthly sales reached 179,900 units, a year-on-year surge of 153.9%. Its plug-in hybrid models have surpassed Volkswagen and Ford competitors in the European market. Unlike the positioning of traditional automakers, BYD spans multiple sectors including automobiles, energy storage, batteries, and photovoltaics. This full-industry-chain new energy engineering capability is exactly the core confidence behind its challenge to traditional global giants.

Recently, BYD executives made a bold statement: within 5 years, they aim to surpass Volkswagen and Toyota to become the world's number one automaker.

As soon as this statement was made, many people were shocked: Is BYD that arrogant? Although sales in the Chinese market are decent, the sales gap is undeniable.

Looking at the data, last year, Toyota remained the global number one for the sixth consecutive year with sales of over 10 million units, selling 11.32 million. Volkswagen, Hyundai, and GM ranked second to fourth, selling 8.98, 7.27, and 6.18 million respectively. Stellantis ranked fifth with 5.48 million. BYD ranked sixth globally with sales of 4.602 million, surpassing Ford for the first time and setting the highest historical ranking for a Chinese automaker.

Although the growth rate is fast, from the data perspective, BYD's global sales are still less than half of Toyota's. With such a gap, how can BYD catch up?

However, there is good news. BYD's overseas expansion is accelerating. In the first half of 2026, BYD's global sales reached 1.809 million, ranking sixth globally with a 4.8% market share. Overseas sales were 789,000, a year-on-year increase of 68%, accounting for over 43% of total sales. Brazil is BYD's largest overseas market, with exports of 194,700 in the first half, both pure EV and PHEV routes proving viable. Thailand's pure EV market share reached as high as 78%, while Australia, Philippines, and UAE also achieved scaled output.

Capacity layout is also accelerating. The Szeged factory in Hungary started assembling cars in the fourth quarter. This is BYD's first passenger car factory in Europe. A second European factory is being selected, with France and Spain on the candidate list, planned to be finalized by the end of 2026.

Morgan Stanley predicts BYD's overseas sales in 2026 will reach 1.6 to 1.8 million, a year-on-year increase of 68% to 89%. If this growth rate can be maintained, breaking 5 million in overseas sales within five years is not impossible.

For BYD to overtake Toyota and Volkswagen, it must first face a cruel reality: in terms of profit, the gap is much larger than the sales gap.

In the first half of 2026, Toyota's global sales were about 5.39 million, Volkswagen about 4.126 million, and BYD 1.809 million ranking sixth. In terms of sales, BYD is about one-third of the leader.

But what about profits? Toyota's operating profit for the 2026 fiscal year was about 3.76 trillion yen, equivalent to about 180 billion RMB. Just the first quarter's net profit attributable to shareholders was about 72.37 billion RMB, about 6 times that of BYD, the most profitable Chinese automaker, and also exceeding the combined profits of all 15 listed Chinese automakers.

The gap in profit per vehicle is more intuitive. Toyota's net profit per vehicle is about 17,000 to 22,700 RMB, while BYD's is less than 7,000 RMB. For selling one car, Toyota earns more than twice as much as BYD.

Volkswagen's situation is much worse than Toyota's, with operating profit margin falling to 3.8% in the first half, and net profit after tax down more than 30% year-on-year. But VW's scale remains there — delivering about 4.13 million globally in the first half, still more than double BYD.

This means one thing: For BYD to overtake Toyota and Volkswagen within five years, it's not just about increasing sales; it's about increasing profits alongside sales. Profit improvement relies on brand premium, technical barriers, and global operational efficiency; these things cannot be rushed.

Li Ke specifically mentioned at the summit: BYD is "severely undervalued" on the Hong Kong Stock Market because "BYD is fundamentally an engineering and technology company, not just an automotive company." Placed in this context, this actually means: Don't judge me using traditional automaker valuation frameworks. But whether the capital market buys into it is another story.

Breaking down BYD's goal to overtake Toyota and Volkswagen within five years, several things need to be achieved simultaneously.

First, overseas sales must continue to grow at a high speed. Overseas sales are expected to be 1.6 to 1.8 million in 2026. To support the global number one sales scale in five years, overseas annual sales must reach at least 5 million. This requires full production of European factories, deep cultivation of Southeast Asian and South American markets, and opening up more right-hand drive markets.

Second, profit per vehicle must increase. Currently, profit per vehicle of less than 7,000 RMB cannot support the profit model of the world's number one automaker. Profit per vehicle in overseas markets is typically higher than domestic, which is one of the reasons BYD is fighting hard to go overseas. Morgan Stanley believes that with increased overseas capacity and higher overseas sales ratio, gross margin will see a positive push.

Third, and the hardest point: maintaining a determined pace in an uncertain world. Li Ke has already said, geopolitics is the number one challenge. Markets that can be sold today might be restricted tomorrow; licenses that can be obtained today might be rejected tomorrow. BYD's choice to temporarily abandon the US market is essentially removing uncertainty from the equation and doing only what it can control.

But the strategy of "doing only certain things" comes with a cost: you never know if the markets you actively abandon will become key variables that decide the outcome later. The US market is at a level of 10 million annual sales, and the European market is accelerating its electrification. If the global landscape changes drastically after five years, will lacking a North American hand become a weakness on the path to the top?

Li Ke did not answer this question. She only said: "We hope the operating environment has certainty, clear prospects, only in this way can BYD master the initiative."

We will see in five years. But what is more worth focusing on now is not whether BYD can overtake Toyota, but whether it can achieve both "sales growth" and "profit improvement" under the premise of bypassing the US. The former tests execution, the latter tests brand power. For a Chinese brand to win both battles in the global market at the same time is much harder than competing on price in the domestic market.