If you were the world’s biggest automaker, where would you look to raise your global profile? The Chinese EV giant BYD reportedly thinks Formula One might be the ticket. Though it’s not a straightforward move. Sponsorship, rather than outright racing, might turn out to be the more practical option.
Interest in F1 comes as BYD continues its rapid international expansion. The company is now the world’s largest EV maker by sales – beating even Tesla – and has set a goal of producing all the vehicles it sells in Europe locally by 2028. F1, for its part, is enjoying strong growth in China. The organisation says it has more than 221 million fans in the country – no small platform for brand building.
So, what are the challenges? First of all, there needs to be space on the starting line for a new racing team. International Automobile Federation president Mohammed Ben Sulayem has signalled openness to a Chinese team joining the grid, but entering Formula One as a constructor would come with a hefty price tag.
A new entrant would likely face an anti-dilution fee exceeding US $450 million to compensate the other teams for broadcasting and sponsorship revenues that are shared among competitors. Then there is investment in facilities, engineering talent and infrastructure. Analysts reckon that even well-funded teams can spend hundreds of millions with little guarantee of competitive success.
Alternative routes also look complicated. BYD could buy a stake in an existing Formula One team, but this would require negotiations with current owners and could leave BYD without real, meaningful control over operations or branding.
So, sponsorship anyone? It would seem the most straightforward option. Backing an existing team would allow BYD to tap into Formula One’s global audience without the regulatory hurdles or technical obligations required of a manufacturer. Sponsorship deals can range from tens of millions of dollars annually for midfield teams to substantially higher figures for championship contenders, but still not as much as BYD would be paying to get a team of its own in the race.
The Dao view: BYD needs to think carefully about how it approaches Formula One
Formula One is one of the world’s most effective branding machines. That’s a huge opportunity for an ambitious brand like BYD. Sponsorship could offer a lower-risk way to accelerate recognition in Europe and North America.
The bigger question is what story BYD wants to tell. F1 already has plenty of carmakers. What it has fewer of are technology brands. If BYD enters the sport, it may gain more by positioning itself as a leader in batteries, software and future mobility than by competing head-on with legacy automotive names already on the grid.
