BYD reached an agreement with the Turkish government to invest $1 billion in building an electric and plug-in hybrid vehicle factory in the region. The new factory is set to start production by the end of 2026. It will have an annual production capacity of 150,000 vehicles, making it the first foreign-owned Electric Vehicle (EV) plant in Turkey.
According to reports from Reuters, Nikkei Asia, and Financial Times, BYD will invest US$1 billion in Turkey to construct a factory with an estimated annual production capacity of 150,000 EVs and an R&D center. BYD's official statement noted that the goal is to meet the growing demand for New Energy Vehicles (NEVs) in the European market.
When the investment plan for the new BYD plant was still being rumored, external estimates suggested the factory's annual capacity could be between 100,000 and 125,000 vehicles. At that time, AFP quoted analysts estimating that BYD could sell about 20,000 to 25,000 vehicles annually in Turkey and export 75,000 to the EU.
Strategic Positioning in the Turkish and EU Markets
According to 2023 statistics, Turkey's annual EV sales were about 65,000 units, with the local manufacturer Togg holding a nearly 30% market share, followed by Tesla at 18.5%. BYD entered the Turkish market in October 2023, but its Atto 3 model sold less than a thousand units and only captured a 1% market share.
The EU has recently increased import tariffs on Chinese EVs to protect domestic industries. If BYD exports EVs to the EU, it will face a total tax rate of 27.4%. Turkey has also taken steps to protect local manufacturers, including a recent 40% tariff on all Chinese imported vehicles.
According to UBS analysts, imposing tariffs could attract car manufacturers to set up production lines within the EU. BYD's first move into Europe, investing in a plant in Hungary, was also based on this reasoning. This plant is expected to start production in 2025, and BYD is considering building a second plant in Hungary.
Although Turkey is not an EU member, it has been a member of the EU Customs Union (EUCU) since 1995, enjoying preferential access to the EU market. The EU is also Turkey's most important automotive export market.
The Marmara region around Istanbul has become one of the world's most important automotive industrial centers, with well-known manufacturers such as Hyundai Motor, Toyota, Renault, and Ford having manufacturing and export bases in the country.
Emerging Trends in Turkey's Automotive Sector
BYD's new plant will be the first foreign-owned EV factory in Turkey. The Turkish government revealed it is still in close investment negotiations with other European and Asian car manufacturers. Turkish President Recep Tayyip Erdogan asked Tesla CEO Elon Musk to set up a factory during a meeting in September 2023.
Recent reports indicated that China's Guangzhou Automobile Group (GAC) and Togg are in talks to establish a manufacturing joint venture. As investing in production capacity in Turkey can exempt companies from the additional 40% tariff, it is speculated that Chinese EV manufacturers such as Chery and Geely might also set up factories in Turkey.
BYD has not disclosed the location of the new plant, but it is rumored to be in Manisa Province, near the Aegean port city of Izmir. Volkswagen had planned to build a factory in Manisa in 2019 but canceled the investment plan in 2020 due to Turkey's military actions in Syria and the COVID-19 pandemic.
