more than three years as China’s leading EV-seller, though BYD has since reclaimed top spot. China’s EV industry as a whole has been battered by a ferocious price war that has crushed margins. Yet BYD is also starting to look out of place as the market focuses far more on software and entertainment. Young would-be customers often inspect the large entertainment display panels on the dashboard before anything else. Several challengers, such as Xpeng and Li Auto, were founded by internet bosses. Other carmakers have been forging partnerships with tech firms. Volkswagen has bought system know-how from Xpeng. A division of Huawei, a Chinese tech giant, is selling software and entertainment systems to no fewer than five carmakers. It has helped JAC, a stodgy state-owned firm, launch a luxury EV brand called Maextro that sells for more than $100,000. Geely has been inking deals left and right, for instance with StepFun, an AI startup, for autonomous driving and with iFlytek, another AI business, for voice recognition. In September it launched a computing platform for AI models with Thundersoft, a Chinese software developer. By contrast, BYD is keeping things in-house. Max Zhang, a member of the team developing its autonomous driving system, points out that other carmakers are at the whim of their third-party suppliers for upgrades. Keeping that control is still the most important thing for BYD, he says. But autonomous driving is one area where the risks of BYD’s vertical integration have become clear. Missteps are more difficult to correct. BYD has been quick to deploy its system in several models, including cheaper ones, even before the technology was mature. This has drawn rare direct criticism from competitors. Yu Chengdong, a Huawei executive, has said that “so-called ‘good enough’ and ‘safe’ intelligent driving are two completely different levels.” Such remarks may explain why Mr Wang said on May 28th that BYD would be the world’s first company to cover losses from autonomous-driving accidents. Visitors to its headquarters this year are treated to a new demonstration: a sporty model spins donuts in the car park while the driver takes his hands off the wheel.
BYD still hopes its batteries will set it apart. Its latest charging technology gets its EVs near to capacity in around ten minutes. An installation at its headquarters freezes an EV at -30°C to show off its resilience. Although competitors such as CATL, the world’s biggest battery-maker, are reproducing many of its achievements, BYD believes it can stay one step ahead. Even so, it is getting ever harder to maintain an advantage from batteries alone. ■ To track the trends shaping commerce, industry and technology, sign up to “The Bottom Line”, our weekly subscriber-only newsletter on global business. This article was downloaded by zlibrary from https://www.economist.com//business/2026/06/03/byd-is-losing-its-spark
A new defence champion is rising from the Gulf The region’s rulers want to reduce their dependence on Western arms June 4th 2026 THE PETRO-MONARCHIES of the Gulf are celebrated big spenders—not least by the West’s defence industry. Their oil wealth pays for about a fifth of global arms imports, with a shopping list ranging from fighter jets to frigates. In a noisy, volatile neighbourhood, safety comes at a price. Now the rich rulers are nurturing their own defence industries, hoping to reduce their reliance on the West. Not surprisingly, the Iran war has hardened this ambition. Saudi Arabia intends that by 2030 half its arms budget will be spent at home, up from a quarter today, and that Saudi Arabia Military Industries (SAMI) will be in the world’s top 25 defence firms by revenue. Yet so far the state-owned enterprise, which has joint ventures with Boeing, an American aerospace giant, among others, mainly produces spare
parts for American fighter jets and a few lines of armoured vehicles. Qatar’s Barzan Holdings is likewise ambitious but small. It is in the United Arab Emirates (UAE) where momentum is strongest. In 2019 around 25 Emirati companies were merged to form the EDGE Group, a national defence champion. It has since bought majority stakes in several foreign firms, and in May agreed to acquire 80% of Costruzioni Motori Diesel, an Italian engine-maker. It has stakes of 51% in ventures with two other Italian firms, Leonardo (in a range of areas) and Fincantieri (in shipbuilding), and a partnership with Germany’s Rheinmetall (in air defence). In November it formed a joint venture with Anduril, a fast-rising American defence-tech firm, to make drones for the UAE and its allies. Last year EDGE’s revenue topped $5bn, with “healthy” profit margins. Orders of about $8bn brought the total outstanding to more than $20bn. Hamad al-Marar, the company’s chief executive, estimates revenue will rise by a fifth over the next two years as these are fulfilled. Already it is among the world’s top three makers of precision-guided munitions. EDGE does not aim to localise everything and anything; rather, it prioritises systems and components deemed critical or whose supply chains might prove insecure. At the same time, its ambition is growing. The firm was already focused on owning IP. Now, says an executive, it is increasingly intent on producing it, too. EDGE’s expansion has led to a reduction in the UAE’s share of global arms imports, to 2.7% in 2021-25 from 3.5% in 2016-20, according to SIPRI, a Swedish think-tank. But the company is not only producing for its home market. In fact it exports close to three-quarters of what it makes, to countries in Latin America, Africa and Asia. Even as regional competition rises, the state of geopolitics means there will be more places to export to, Mr Marar says. In January his company signed a joint-venture deal with Barzan, and it has licensed its vehicle technology to SAMI. The UAE’s growing defence prowess has stood it in good stead in the war. Iran has struck at the Emirates far more often than at Saudi Arabia or Qatar. About 80% of Iran’s incoming Shahed drones were tackled by Emirati products, officials say. EDGE’s electronic-warfare systems kicked into
action, spotting incoming missiles and drones, and setting off jamming and spoofing, working in concert with American anti-ballistic-missile systems. The upside is that EDGE’s technology is now combat-tested, says Mr Marar. Of course, the war has created challenges as well: supplies stuck in the blocked Strait of Hormuz, for instance, are bound to delay production plans. Still, the Emiratis’ efforts over the past few years to indigenise defence production now look farsighted. Even with powerful allies and brotherly neighbours, greater self-sufficiency is valuable. The UAE’s defence champion might just give it the edge it needs. ■ To track the trends shaping commerce, industry and technology, sign up to “The Bottom Line”, our weekly subscriber-only newsletter on global business. This article was downloaded by zlibrary from https://www.economist.com//business/2026/06/04/a-new-defence-champion-is-rising- from-the-gulf
Lego, Pokémon and the future of fun Toys and media brands are increasingly joining forces June 4th 2026 Lego executives tried valiantly to present their latest products on June 2nd amid a din of chirping, croaking and snoring. The toy giant’s newest range is part of a collaboration with Pokémon, a Japanese brand that has evolved from video game to multi-media phenomenon. Built-in chips let the creatures train, battle and noisily chat when put near each other. Pokémon is the latest in a growing line of Lego tie-ups with media brands. Since the success of a Star Wars set in 1999, the Danish firm has sought licences everywhere from gaming (Nintendo) and Hollywood (Harry Potter) to sport (Formula One). Generic pirates and spacemen are increasingly squeezed off store shelves by the likes of Super Mario. Toys based on
licensed intellectual property (IP) provide more than half of Lego’s $13bn annual revenue, estimates Circana, a research firm. The brickmaker is not the only example. Hasbro’s Monopoly has versions that license everything from James Bond to Barbie. Funko, which makes the wildly popular Pop! dolls, offers likenesses based on athletes, actors and much else. Its slogan—“Everyone is a fan of something”—sums up the idea. The share of global toy sales based on licensed IP has risen from 25% to 37% in the past seven years, says Frédérique Tutt of Circana. Lego shows how the strategy can work. Tapping into another brand’s fanbase is less risky than investing in a new line of your own. It is also more agile: last year Lego went big on “Jurassic World” sets to coincide with a new movie; this year it will capitalise on Pokémon’s 30th anniversary. IP also attracts adults, who might not buy an ordinary Lego castle but could be tempted by a $650 replica of one from “Lord of the Rings”. Changing from a kids’ company into an all-ages pop-culture brand has helped to nearly double Lego’s annual revenue since 2020, to over twice that of Mattel, its nearest rival. Working with partners isn’t easy. Pokémon staff made weekly trips to Lego’s headquarters in Billund. Twenty-five new types of brick were needed to get details like Pikachu’s arms and Jigglypuff’s ears right. And Lego has to send licensees a cut of sales—though the generally higher prices of its branded sets suggest it is passing some of the cost on to consumers. Fast-moving online culture also presents challenges. Julia Goldin, Lego’s marketing and product chief, says that social media make it easier than ever to spot trends—but harder to know which will endure. Creating a new Lego range takes a good 18 months, longer than the lead-time for firms making card games or plush toys. Lego’s take on “KPop Demon Hunters”, a surprise blockbuster film last summer, will not be out until later this year. The company emphasises that it still builds its own brands. Botanicals, a newish floral range aimed at adults, will probably be its best-selling line this year. But third-party IP seems to be what its customers crave. On Lego Ideas, a forum run by the company where fans suggest new themes, requests
include a “Happy Days” diner and a “Scooby-Doo” haunted house. Time for children—and perhaps adults—to make more space on the toy shelf. ■ To track the trends shaping commerce, industry and technology, sign up to “The Bottom Line”, our weekly subscriber-only newsletter on global business. This article was downloaded by zlibrary from https://www.economist.com//business/2026/06/04/lego-pokemon-and-the-future-of-fun