In July 2024, the European Commission imposed additional tariffs on Chinese electric cars, causing significant concern among Chinese producers. To circumvent these new customs barriers, China’s largest electric car manufacturer, BYD, has made a strategic decision to build factories in Hungary and Turkey.
The construction of a plant in the Turkish province of Manisa is not only a response to the needs of the local market, which has nearly 90 million inhabitants, but also a strategic move to benefit from the customs union that has connected Turkey and the European Union since 1995. This union covers two categories of goods—industrial goods and processed agricultural products—allowing BYD to export its vehicles to EU markets without paying customs duties. For BYD, these duties currently amount to 17.4%. By establishing this plant, BYD plans to export up to 75,000 vehicles per year to the EU.
The decision to invest in Turkey was further accelerated by the imposition of an additional tariff by Turkey on Chinese electric cars in March this year, which now stands at 40%.
Turkey is becoming an increasingly attractive destination for foreign investors, as highlighted by the EY Europe Attractiveness Survey report for 2023. The country ranked fourth in Europe in terms of the number of greenfield projects—direct investments involving the creation of new enterprises from scratch—surpassing Poland. The value of investments in Turkey reached USD 13 billion, three times more than the previous year.
Photo: Strilets`, CC BY-SA 4.0, via Wikimedia Commons