Chinese electric vehicle manufacturer BYD is evaluating a strategic entry into Formula One to expand its global brand recognition, following high-level exploratory discussions between company leadership and Formula One management.

Stella Li, Executive Vice President, BYD, confirmed that she recently attended the Monaco Grand Prix and held discussions with Formula One CEO Stefano Domenicali regarding a potential entry into the championship. The talks coincide with a broader trend of Chinese automotive brands expanding into European motorsport, including Chery’s premium brand Exlantix targeting the 24 Hours of Le Mans by 2030 and Geely’s participation in the TCR touring car series.

While BYD is the world’s largest electric vehicle (EV) manufacturer by sales, the company has not yet finalized its approach to the sport.

“We are still too young and inexperienced for this type of competition. We are studying it and trying to understand the conditions and the current state of BYD’s technology,” Li said. He emphasized that any motorsport participation would serve as a platform to validate the company’s research and development capabilities on a global stage.

“BYD is a technology company. We have a great deal of proprietary technology, and our mission is to build one of the most admired brands in the automotive industry. At the same time, we want to showcase this innovative technology to the world,” Li said.

BYD is evaluating multiple entry pathways, each with distinct financial, operational, and regulatory implications. One option would be to join Formula One as a full 12th team. Formula One data points to a strong commercial case for a Chinese entrant, citing a domestic fan base of 221.1 million people and the established Shanghai Grand Prix. In addition, BYD plans to localize all of its European vehicle production by 2028.

However, building the required infrastructure would involve substantial investment. For example, Aston Martin Formula One’s factory and technology campus in Silverstone, which includes a dedicated wind tunnel, is estimated to have cost between £150 million and £200 million (US$200 million to US$266 million). A new entrant would also be required to pay an anti-dilution fee of more than US$450 million to compensate existing teams for changes to revenue distribution, matching the fee paid by Cadillac to join the championship this year.

Another option would be acquiring a stake in an existing team. Investment firm Otro Capital is currently seeking to sell its 24% minority stake in Alpine Formula One. However, any transaction would require approval from majority owner Renault, which has shown little willingness to relinquish operational control. Former Red Bull team principal Christian Horner, who is seeking a return to Formula One, has reportedly established contact with BYD, although analysts suggest the Alpine minority stake may align more closely with his objectives.

The lowest-risk alternative under consideration is a corporate sponsorship agreement. “Entering F1 as a sponsor only would be the lowest-risk option for BYD because it avoids FIA regulatory requirements, including demonstrating technical and governance compliance,” said Nick De Marco, a sports law barrister, Blackstone Chambers, in an interview with Reuters.

A sponsorship model would allow BYD to partner with a midfield or lower-tier team at a significantly lower cost than a title sponsorship. By comparison, software company Atlassian reportedly pays between US$40 million and US$60 million annually for its title partnership with Williams, while Oracle committed US$300 million over five years for its title branding agreement with Red Bull Racing.

According to Bernstein analysts, the automotive sector currently represents just 1% of Formula One’s annual sponsorship value, compared with 14% for technology companies and 26% for luxury brands. Formula One currently does not have a series-wide automotive partner.

Ian Moore, research analyst, Bernstein, noted that a sponsorship-only strategy could create friction with manufacturers already competing on the grid. “Everyone wants to be involved with F1. It’s the greatest marketing vehicle for OEMs (original equipment manufacturers) that exists,” Moore said.

However, he added that he is “not sure if that’s an option [for BYD] given that they’re also an OEM,” citing potential conflicts with established manufacturers such as Ferrari, Mercedes-Benz, Ford, and General Motors’ Cadillac, all of which build power units or chassis for the championship.

De Marco also argued that a sponsorship-only strategy would limit BYD’s ability to showcase its engineering capabilities. “I imagine that’s the key benefit BYD would seek to derive from participating,” he said.

BYD has increasingly relied on high-performance projects to demonstrate its technological capabilities, including the Yangwang U9 Extreme electric supercar. The vehicle produces 3,000 horsepower and set a production-car top-speed record of 496.22 km/h. At the same time, the company continues expanding its commercial lineup, recently introducing the Dolphin G DM-i compact plug-in hybrid.

According to Li, elite motorsport environments generate valuable engineering data that directly influences the development of production vehicles.

“When you reach the limit, you want to demonstrate technology in every detail: chassis, design, material selection, driving experience, and performance,” Li explained. “Understanding how aerodynamics can make a car faster—and therefore more efficient—is essential. Combined with technologies such as carbon fiber, which BYD already incorporates into its vehicles, this reinforces BYD’s identity as an engineering company.”