BYD is threatening to sue the US government after the Pentagon added the world’s largest EV maker to its list of “Chinese military companies” this week.
Stella Li, BYD’s executive vice-president, said the company will use every legal “weapon” at its disposal to fight the designation, which she called a false claim aimed at hobbling BYD because of its international success.
Pentagon adds BYD to its 1260H blacklist
On Monday, the Department of Defense published an updated version of its Section 1260H list of “entities identified as Chinese military companies” — and BYD is now on it, alongside Alibaba, Baidu, NIO, robotics maker Unitree, and lidar producer RoboSense.
The list now covers 188 Chinese entities, up from roughly 130 last year.
In the document, the Pentagon claims BYD is “directly and indirectly” affiliated with SASAC, the institution that manages Chinese state-owned companies, and with China’s Ministry of Industry and Information Technology. It describes the automaker as a “military-civil fusion contributor to the Chinese defence industrial base.”
The designation blocks BYD from securing US government contracts, with the ban on direct Defense Department contracts taking effect later this month and a separate prohibition on acquiring goods or services through intermediaries kicking in by June 2027. It doesn’t automatically trigger sanctions, but the Pentagon says it “reserves the right to take additional actions on these entities.”
The Pentagon has not provided direct evidence for its claims. US officials argue that the line between private and state-owned companies in China is often blurred, and they point to Beijing’s official “civil-military fusion” policies, which by law compel Chinese companies to comply with government and military demands.
If this sounds familiar, it’s because the Pentagon did the same thing to CATL, the world’s largest EV battery maker, back in January 2025. CATL also denied the claims and is still on the list.
BYD: ‘We will use our legal weapons’
Li didn’t hold back in comments to The Telegraph. She framed the designation as an attack on BYD’s success rather than a security finding:
Because you are too strong, somebody challenges you – they cannot challenge your products so they will challenge this kind of perception. But we will use our legal weapons to protect us. Everybody should know in the world: BYD is not a company that can be pushed around, [where] you can give some false claim.
Asked directly whether BYD intends to sue the US government, Li said the company will first try to talk “very openly, transparently,” but added: “if everything’s getting worse, we have to use our legal protection.”
The timing is notable. BYD officially overtook Tesla as the world’s largest all-electric vehicle maker in 2025, selling 2,254,714 BEVs against Tesla’s 1,636,129 deliveries — a gap of over 600,000 vehicles.
The company’s international growth has been just as dramatic. BYD is now the best-selling EV brand in several key overseas markets, including the UK, Australia, and Brazil. In Britain, BYD has sold 31,553 cars so far in 2026 — more than double last year’s pace — taking a 3.4% market share through five months, up from 1.7% over the same period in 2025, according to the SMMT. That puts it ahead of Mini, Renault, Volvo, and Land Rover.
Electrek’s Take
The practical impact of this designation on BYD is close to zero. BYD doesn’t sell passenger cars in the US, tariffs already took care of that, and it certainly wasn’t counting on Pentagon contracts. Its US footprint is essentially an electric bus plant in Lancaster, California, which has been operating for over a decade with American union labor.
That’s why Li’s response is more about reputation than business. The 1260H list signals to American partners, suppliers, and investors that a company is a security threat, and it often paves the way for harsher measures later. CATL learned that lesson, and now BYD is on the same track.
The pattern here is hard to ignore. The US can’t compete with BYD on product, no American automaker sells an EV anywhere near BYD’s price-to-capability ratio, so the response has been tariffs first, and now a military designation delivered without published evidence. Maybe the Pentagon has solid intelligence behind the listing, but “trust us” is a tough sell when the same designation conveniently lands on the company that just dethroned Tesla globally.
It’s also worth remembering that the line between automakers and the military isn’t exactly bright in the US either. The Defense Production Act lets Washington compel American companies to prioritize defense orders — GM was forced to build ventilators under it in 2020 — and FISA orders compel US tech companies to cooperate with intelligence agencies. GM even has an entire defense division, GM Defense, which builds the Army’s Infantry Squad Vehicle on the Chevy Colorado platform. By the Pentagon’s own logic, that would make GM a “military-civil fusion contributor” to the American defense industrial base. There are real differences between the two systems — judicial oversight and transparency, mainly — but civilian companies serving the military is hardly a uniquely Chinese arrangement.
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