Chinese electric vehicle powerhouse BYD strengthened its footprint in the European market with a new $1bn production facility in Turkey, which will allow the company to sell across the region without paying new import tariffs on electric vehicles produced in China.

The new project, which includes a sustainable mobility research and development centre, was at the heart of an agreement the company’s CEO, Wang Chuanfu, signed with Turkey’s Industry and Technology ministry on July 9. It will have a production capacity of 150,000 vehicles per year and create up to 5000 direct jobs, according to a statement by Invest in Turkey. Production is expected to begin in late 2026.

Although the location of BYD facility has yet to be officially confirmed, it will “most likely” be in Manisa, western Turkey, on the site that was once meant to host a new $1.4bn manufacturing facility by Volkswagen, says Burak Dağlıoğlu, President of the Investment Office of the Presidency of the Republic of Turkey. Eventually, the German carmaker’s local plans fell through in 2020.

Mr Dağlıoğlu says Turkish authorities have been engaging with Chinese EV makers since the pandemic and their commitment was the real difference. For its part, among the factors that Mr Chuanfu mentioned as part of BYD’s decision to choose Turkey are “its developing technology ecosystem, strong supplier base, extraordinary location and qualified workforce.”

Tariff jumping 

Combined with a similar facility the company is already building in Hungary, the recent announcement adds momentum to BYD’s ambitions to become a key player in the European market and localise production to avoid import tariffs.

Both the EU and Turkey, which is part of the EU’s Customs Union, introduced steep tariffs on the imports of Chinese EVs in June.

In March, Turkey’s Trade ministry announced an additional 40% import tariff on electric vehicles imports from China. A few weeks later, the measure was expanded to any car import from China “to increase and protect the falling share of domestic production in the domestic market, taking into account the developments of the foreign trade balance and our current account deficit targets, and also to encourage domestic investment and production,” the ministry explained in a statement on June 8.

Turkey’s automotive industry, which features the likes of Ford, Hyundai, Renault, Stellantis and Toyota, produced around 1.5 million vehicles in 2023, up 8.6% from 2022, according to figures from the Automotive Industry Association (OSD), with around two-thirds exported to the EU and other markets. The country also imported more than 815,000 vehicles in 2023, up 79.6% from a year earlier, OSD figures show.

“Our approach wants to make sure that companies are manufacturing new energy vehicles in Turkey,” Mr Dağlıoğlu explains. “Tariffs are part of this effort. The idea is to protect the automotive ecosystem in Turkey, including customers, and encourage manufacturers to produce in the country.”

On June 12, the European Commission introduced its own additional provisional tariffs of up to 38.1% — which apply on top of the existing 10% tariff — on the import of Chinese vehicles, as it concluded that the “value chain in China benefits from unfair subsidisation, which is causing a threat of economic injury to EU [battery EV] producers”. As regards BYD specifically, the company was given an extra 17.4% tariff.

“We were waiting for Chinese [original equipment manufacturers] to leverage markets with which the EU has free-trade agreements or are part of a customs union, such as Turkey,” Matthias Schmidt, publisher of the European Electric Car Market Intelligence study, said. “This is nothing new however,” he adds, pointing out that Ford’s local joint venture with Turkish conglomerate Koç Holding, Ford Otosan, and Toyota has both successfully been exporting to the EU from Turkey.

“BYD is not likely to be the last to leverage Turkey’s customs union free trade access to the EU,” he adds.

Speedy Working Motors, a subsidiary of China’s Brilliance Auto Group, also submitted a proposal to the Turkish government earlier to build a plant in the country able to produce 50,000 vehicles per year, Chinese media outlet Yicai Global reported in early July.

Source: fdiintellegence
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