BYD eyes manufacturing in Turkey as another route into EU customs area for EV imports

“We would like to complete the talks as soon as possible. We have come a long way with both of them,” Minister of Industry and Technology Fatih Kacir told Bloomberg in an interview in Ankara. Separate negotiations with SAIC Motor Corp., which owns MG, and Great Wall Motor Co. are also underway, he said.

BYD, Chery, SAIC and Great Wall Motors didn’t respond to requests for comment.

The move could give Chinese car manufacturers easier access to the European Union, with which Turkey has a customs union agreement. Turkey is a major market on its own right, too, with EVs making up 7.5% of all car sales in 2023. 

The national energy market regulator expects the number of EVs in the country to increase by about 180,000 by 2025. Researcher BMI predicts that EVs’ share of Turkey’s domestic car sales will reach 30.4% in 2032.

BYD Europe Managing Director Michael Shu said last week that he saw room for a second European plant in 2025, in addition to one already under construction in Hungary. 

European investments may help BYD avoid any new import tariffs resulting from an EU probe into state subsidies for Chinese EV makers. Turkey is also imposing additional taxes on most EVs produced abroad.

Ankara is trying to insulate TOGG — the country’s first domestic EV maker — from competition until the new brand takes hold in the domestic market, the fourth largest in Europe as of the fourth quarter.

A final investment decision by either of the two Chinese firms would be a boon for The Turkish government, which has tried for years to leverage its location connecting Asia and Europe to attract foreign investment into its manufacturing sector, so far with little success.

One notable loss was Volkswagen AG’s decision to drop a planned factory investment after the country’s military action in northern Syria prompted international outcry in 2019.

The minister said Turkey is an ideal base for exports into the EU because of its customs union with the bloc and its sophisticated automobile industry. Cars were among Turkey top exports last year, with the country selling $35.7 billion worth of vehicles and spare parts in 2023, up from $21.6 billion a decade earlier, according to data from the Automotive Manufacturers Association.

Any decision to open a car plant in Turkey would bring the Chinese firms “privileged opportunities for battery investments as well,” Kacir said, adding that the talks may or may not yield in a final investment decision.

TOGG and China’s Farasis Energy are also constructing a battery plant in the northwest city of Bursa in Turkey under a joint venture.