To expand any industry, financing is essential. This can come in the form of equity, debt, or grants. The balance between these changes over time and reflects how market players evolve. The EV industry has grown rapidly over the last seven years, and the debt landscape for individual companies has shifted significantly.

Here we look at the debt-to-capital ratio – a measure of how much of a company’s total capital is funded by debt – across a selection of EV players.

Falling debt for BYD and Tesla

Tesla and BYD are two prominent players that have seen debt fall and stabilise in recent years. In Q1 2021, Tesla and BYD had debt-to-capital ratios of 33.8% and 48.7%, respectively. By Q2 2025 these had dropped to 14.4% and 14.9%.

Debt within these companies has dropped as revenue from sales has allowed stronger profitability and the ability to reduce debt. Leverage was key during the high-growth phases of these companies, helping to build out facilities and brand image. Both have now scaled to more financially mature organisations and are no longer reliant on debt. However, reports in 2025 emerged stating that BYD has a high proportion of “hidden debt” within its supply chain, suggesting it is more reliant on debt than its balance sheet shows.

Increasing debt for Xpeng, Rivian, and Nio

Although Xpeng, Rivian, and Nio post sales in the thousands, they are all still loss-making companies. They continue to rely on debt to fund operations and growth, putting pressure on the financial health of these companies. If revenue growth does not accelerate, debt-to-capital ratios will continue to rise. While high ratios are not automatically negative, it can increase the risk of insolvency.  

Stable debt for Li Auto and Seres Auto

Li Auto and Seres Auto have comparatively stable debt levels but at opposite ends of the spectrum. Li Auto’s consistently low debt-to-capital ratios reflect a strategy of prioritising equity funding. In 2020, it listed on the NASDAQ raising $1 billion, followed in 2021 by a Hong Kong raising $1.5 billion, and in 2022 it raised a further $2 billion from a stock offering on the NASDAQ. These funding rounds allowed it to expand with a limited debt reliance.

Conversely, Seres Group, which owns the AITO brand, has operated a highly leveraged business model, with its debt-to-capital ratio siting over 60% for four of the last 18 quarters. However, the group raised $700 million in a recent funding round as it looks to reduce its debt-to-capital ratio and fund further expansion through equity rather than debt.

To read more about this see our Energy Transition Capital & Profitability Heatmap briefings.

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