Chinese car company BYD has surprised many by planning to build a car factory worth USD 1 billion, or equivalent to IDR 16.1 trillion, in Turkey. The factory is expected to officially operate in 2026 and will produce 150,000 electric and hybrid cars per year.
Reported by Carscoops on Wednesday (10/7/2024), BYD’s step to build a factory in Turkey is believed to significantly increase the brand’s access to the European Union. The large number is believed to make it easier for BYD to dominate the electric car market in Europe.
In addition, BYD can also avoid the latest import tariffs on electric vehicles made in China that have just been enacted recently. “The factory will employ around 5,000 people. It is not clear what proportion of the cars produced at the factory will be electric vehicles versus plug-in hybrids, but this will likely depend on consumer demand,” explained Carscoops.
BYD mentioned the reasons why they chose Turkey to build their new car factory. “Turkey’s unique advantages such as a growing technology ecosystem, a strong supplier base, an excellent location, and skilled workforce, BYD’s investment in this new production facility will further develop the brand’s local production capabilities and enhance logistics efficiency,” BYD explained.
Currently, Chinese cars entering the European region do face some restrictions in the form of new regulatory tariffs decided by the European Union. BYD will even face a 27.5% tariff on the electric vehicles they produce in China and sell in Europe.
This is done to protect the European automotive industry, which is directly affected by the presence of Chinese-made cars. Turkey has even recently imposed an additional 40% tariff on all Chinese vehicles to protect its domestic car industry.
Fortunately for BYD, Turkey is part of the European Union Customs Union, which means vehicles built there can be exported to Europe without additional tariffs. Last weekend, Turkish President Recep Tayyip Erdogan told Chinese leader Xi Jinping that this 40% tariff would be waived for brands investing in production in Turkey, which BYD is now doing.
More than 1.4 million vehicles were produced in Turkey last year, with around 70% being passenger cars from brands including Hyundai, Toyota, Renault, and Ford. Interestingly, foreign car manufacturers have not established new car factories in the country since 1997, when Honda opened a factory there.
