BYD gets creative to bypass EU tariff hikes, to build a $1 billion plant in Turkey

Turkey is preparing to announce a significant agreement with Chinese carmaker BYD Co. for the construction of a $1 billion plant in the western part of the country. This move is set to enhance BYD’s presence in Europe amidst growing trade tensions.

President Recep Tayyip Erdogan is expected to reveal the details of this accord during a ceremony in Manisa province, where the plant will be built. Turkish officials have disclosed this information but requested anonymity as they are not authorized to speak publicly. BYD representatives and the president’s office have not commented on the matter.

The new factory will provide BYD with improved access to the European Union due to Turkey’s customs-union agreement with the bloc. This development comes as the EU plans to impose provisional tariffs on electric vehicles (EVs) imported from China, which will result in BYD facing an additional 17.4 per cent charge on top of the existing 10 per cent rate.

In addition to the European market, the new plant will also cater to Turkey’s domestic market, where EVs accounted for 7.5 per cent of car sales last year in a country with a population of nearly 90 million.

Recently, Turkey decided to retract its earlier plan to impose an additional 40 per cent tariff on all vehicles from China, a move aimed at encouraging investment. This decision followed discussions between Erdogan and China’s President Xi Jinping during a Shanghai Cooperation Organization meeting in Astana, Kazakhstan.

BYD has been rapidly expanding in recent years, becoming China’s best-selling car brand. The Shenzhen-based manufacturer plans to introduce its lower-priced EVs to Europe, including the Seagull hatchback, expected to sell for less than €20,000 ($21,700).

On Thursday, BYD inaugurated its first EV plant in Southeast Asia, located in Thailand. The company has also acquired a former Ford Motor Co. factory in Brazil and is exploring locations for a plant in Mexico. Additionally, BYD’s first European car factory in Hungary is currently under construction.

BYD’s sales soared to a record 982,747 vehicles in the second quarter, marking a more than 40 per cent increase from the previous year. Although the company’s sales in Europe have been slow, BYD is making a significant marketing effort in the region, even replacing Volkswagen AG as a main sponsor of the European Championship football tournament.

This new plant in Turkey is expected to significantly boost BYD’s footprint in Europe and contribute to the growing EV market both domestically and internationally.