E-Mobility Expansion continues: BYD factory in Turkey

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BYD has announced a new factory in Turkey. With this, the Chinese car manufacturer continues its international expansion. BYD expects several advantages from the Turkish market.

BYD has announced its second European car factory in Turkey, marking a swift expansion in the global market. The Chinese electric and hybrid vehicle leader's first European factory is under construction in Hungary. According to Bloomberg reports, the new factory will be built in the Manisa province near Izmir, further solidifying BYD's rapid growth strategy in Europe.

The investment decision of "Build Your Dreams" is being analysed in Western press reports primarily in the context of the new trade barriers in the US and the EU. From a Chinese perspective, this only has a marginal connection. BYD is building new car factories worldwide at a high pace, not just in Europe.

On July 4, just a few days before the signature in Istanbul, BYD began production at its new factory in the province of Rayong in Thailand. A subsidiary of BYD is currently investing in a new car battery factory in Thailand. In January of this year, the first BYD cars rolled off from a new factory in Uzbekistan. In Brazil, BYD took over a former Ford factory. In Mexico, according to media reports, it is looking for a suitable location.

Unimpressed by protectionist reflexes

As the impressive list shows, the Chinese OEM continues its "international expansion", as described by the Chinese specialist portal "CN EV POST". In doing so, it is rather unimpressed by protectionist reflexes in individual regions or countries and current geopolitical tensions.

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This "Go-Global" strategy of BYD is supported by a rapid and sustained success in the market. In the second quarter of 2024 alone, the electric car manufacturer sold well over 980,000 new cars, 40 percent more than in the same period of the previous year, according to Bloomberg. Last year, BYD overtook Tesla in China as the market leader for electric cars and now sells more vehicles of any drivetrain than the former local champion, Volkswagen.

The private company, based in Shenzhen, will be able to continue this successful streak in the coming years, according to analysts. "We believe that other companies in the industry will have difficulty replicating the company's technology leadership, as it builds on a decade of innovation and unique vertical integration capabilities," write the market observers at HSBC about BYD.

Produce key components themselves

The Chinese company follows a long-term plan to produce as many key components as possible—from the battery to chips to electric drive—itself. Accordingly, it is heavily expanding its own research and development. BYD is investing one billion euros in a new car factory in Turkey with an annual capacity of 150,000 vehicles. In parallel, a new research and development center is planned, as announced by the Turkish Ministry of Industry.

As for the additional import duties imposed by Brussels on Chinese electric cars, it may have marginally influenced BYD's new location choice. While Turkey is not part of the European Union, it does have a customs agreement with the EU and free trade agreements with 23 European countries.

In any case, BYD hopes to conquer the European market better from Turkey. The new factory is supposed to improve the company's "logistical efficiency" in order to more easily reach European customers, BYD itself writes in its press release after the contract signing in Istanbul.

Turkey increases import duties on Chinese cars

However, BYD also has its eye on the Turkish market itself, which with nearly 90 million people and a market penetration of electric cars at 7.5 percent so far, offers a lot of potential. Similar to the EU, Turkey has also tried to protect its domestic auto industry from Chinese competition in recent times. In June, the Turkish government imposed additional import duties of 40 percent on Chinese cars, in addition to the previously existing ten percent.

In July, these new additional duties were abolished by a decree of the Turkish President Erdogan for all Chinese companies, as long as they invest in Turkey. As Bloomberg reports, Erdogan signed this presidential decree shortly after a meeting with Chinese state and party leader Xi Jinping on the sidelines of a conference in Astana, Kazakhstan.

All debates about more or less sensible tariff barriers, in the USA, the EU, Turkey or elsewhere, should not distract from one fact: BYD is currently establishing itself on the world market.

Intended for VW

It was surely not intended, but a certain plot of land is being discussed for the new location in the province of Manisa in Turkey. Originally, it was intended for a Turkish VW factory and has a symbolic significance in this context. At VW, capacities are declining and the Turkey plan was dropped again in 2020. Meanwhile, the Chinese will now enrich parts of the bustling car market in Turkey, where Fiat, Renault, Ford, Toyota, and Hyundai have already built factories.

Thanks to the BYD decision, Turkey gains 5,000 new jobs.