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Türkiye is expected to launch legal proceedings to recover investment incentives granted to Chinese electric vehicle maker BYD if the company formally cancels its planned $1 billion manufacturing project in the western province of Manisa, Industry and Technology Minister Mehmet Fatih Kacir told lawmakers.
The move would follow BYD's decision in June to put the investment on hold, after making no meaningful progress on the project since signing an investment agreement with the Industry and Technology Ministry in 2024.
BYD received an exemption from Türkiye's additional 40% customs duty on Chinese-made vehicles after committing to establish local production with an annual capacity of 150,000 vehicles, with operations scheduled to begin by the end of 2026.
If the investment is abandoned, those imported vehicles would lose their exemption status, allowing authorities to collect the unpaid duties retroactively, according to Türkiye daily, citing Kacir's response to lawmakers' written parliamentary questions.
Kacir said the project was included in Türkiye's project-based incentive program as part of efforts to expand the country's capacity to produce new-generation vehicles.
He noted that the investment was covered by the incentive framework, with its scope, minimum requirements, project schedule and the company's responsibilities and commitments clearly defined.
Monitoring and inspection procedures, along with the necessary administrative steps, have been carried out under the relevant incentive legislation, Kacir emphasized.
Under the applicable rules, the company's guarantee letters would be activated if it formally walks away from the factory, while waived customs duties would be recovered with late-payment interest.
Authorities would also take back the land allocated to BYD in the Manisa Organized Industrial Zone (OSB) for the facility, according to the report.
BYD put its Türkiye plans on hold as it turned its immediate attention to expanding production elsewhere in Europe.
Executive Vice President Stella Li said in June that the automaker was prioritizing its new factory in Hungary, where production is expected to begin in the fourth quarter of 2026. The company has not provided a timeline for resuming work in Manisa.
Following BYD's decision, the Industry and Technology Ministry stated that its investment agreement with the company remains valid, along with the conditions, obligations and guarantees attached to the deal.
The ministry also confirmed that BYD's access to incentives, including customs duty exemptions, was suspended at the beginning of 2026 after the project failed to make the expected progress for an extended period.
BYD sold 45,537 vehicles in Türkiye in 2025, making it the country's best-selling brand in the plug-in hybrid and new-energy vehicle segments.
The automaker's sales fell 73.3% year over year to 6,809 units in the first half of 2026, down from 25,501 vehicles in the same period a year earlier, reflecting the loss of its competitive advantage over other imported brands.
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