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Ankara’s tariff policy pays off: BYD to invest $1B in new EV plant in Türkiye

Ankara's tariff policy pays off: BYD to invest $1B in new EV plant in Türkiye Members of the press and the general public check out the Atto 3 electric SUV made by Chinese carmaker BYD, at the Fully Charged Live electric vehicle trade show in Farnborough, Britain, April 28, 2023 (Reuters Photo)
By Newsroom
Jul 8, 2024 8:14 AM

Chinese electric vehicle (EV) manufacturer BYD, which surpassed Elon Musk’s Tesla in the fourth quarter of 2023 to become the world’s top seller of EVs, plans to build a $1 billion plant in Türkiye.

The facility will be located in the western province of Manisa, as confirmed by Turkish officials to Bloomberg, adding that President Recep Tayyip Erdogan is expected to announce the investment on July 8 in an official ceremony held in Manisa.

Mehmet Fatih Kacır, Minister of Industry and Technology, told Bloomberg in May that BYD and Chery were in advanced negotiations to invest in Türkiye.

Officials stated that the negotiations with BYD have been finalized and that the company will build its second factory in Türkiye after the first factory was announced to be built in Hungary in Europe.

Türkiye’s tariff adjustment

Türkiye has been actively seeking to attract carmakers, focusing on Chinese companies. This effort is part of a broader strategy to boost the country’s automotive industry.

A recent presidential decree published in the Official Gazette reduced tariffs on imported Chinese vehicles. According to the decree, carmakers investing in Türkiye will be exempt from these additional tariffs.

This follows the Turkish government’s announcement on June 8 of a 40 percent additional tariff on imported fuel and hybrid passenger vehicles from China, effective July 7. The tariff aims to protect local carmakers from growing competition from Chinese brands. However, companies that commit to investing in Türkiye will only be subjected to a 10 percent regular customs duty.

This policy shift came after discussions between President Erdoğan and China’s President Xi Jinping during a Shanghai Cooperation Organisation meeting in Astana, Kazakhstan.

Türkiye as a gateway to the European market

BYD’s investment in Türkiye marks a significant milestone in the country’s automotive sector and highlights the strategic importance of Türkiye as a gateway to the European market for Chinese automakers.

Establishing plants in Türkiye will provide Chinese automakers with easier access to the European market. Türkiye’s customs union agreement with the European Union (EU) facilitates this access.

The EU recently imposed additional provisional duties of up to 38 percent on Chinese electric car imports, making Türkiye an attractive production hub for Chinese companies.

Market presence and performance

Currently, 11 Chinese brands, including BYD, Skywell, MG, Chery, Leapmotor, Seres, Maxus, Hongqi, DFSK, NETA, and SWM, sell their vehicles in Türkiye. Chinese brands sold approximately 60,000 vehicles in Türkiye last year, capturing a 6 percent market share. In the first six months of 2024, their market share increased to 8 percent.

According to data from the Automotive Distributors and Mobility Association (ODMD), BYD sold 1,426 vehicles in Türkiye during the January-June period, while Chery’s sales reached 34,501 units. Other notable sales figures include MG with 11,074 units, Skywell with 200 units, and DFSK with 184 units.

Competitive landscape

Tesla reclaimed the top spot in global EV sales in the first quarter of 2024. Despite BYD’s record annual profit of 30 billion yuan ($4.1 billion) in 2023, the company reported lower-than-expected revenue for the first quarter of 2024.

BYD faces intense competition in China, with 129 EV brands in the market, only 20 of which have achieved a domestic market share of one percent or more.

Last Updated:  Jul 13, 2024 1:56 AM