China Market Insider Location Gamble at BYD: Turkey Instead of Hungary?

Related Vendors

FAULHABER Drive Systems

Taiwan Machine Tool & Accessory Builders' Association (TMBA)

BYD is said to be rethinking its Europe strategy: less Hungary, more Turkey. Lower location costs are enticing there. While Budapest angrily denies the claims, Istanbul celebrates.

Is BYD slowing its plans in Hungary and instead building more EVs in Turkey? An exclusive Reuters report on July 22 sparked angry denials in Budapest and celebrations in Istanbul. BYD only commented that its plans in Europe are proceeding "as scheduled," according to the Chinese newspaper Global Times.

The controversy surrounding the Reuters report and the strategy of China's largest EV manufacturer highlights how the expansion of e-mobility in Europe is being driven by both market dynamics and Brussels' tariff policies. For car manufacturers, politics is increasingly becoming a risk factor as they invest billions in their electrification efforts.

Competition in Southeastern Europe

Citing unnamed "sources," Reuters reported that BYD intends to delay series production at its under-construction plant in Hungary until 2026. Instead, the OEM reportedly plans to ramp up production in Turkey faster and more extensively than previously known due to lower labor costs there, according to Reuters.

The report has not yet been refuted by facts or clear denials from the automaker. However, István Joó, government commissioner and CEO of the National Investment Agency HIPA in Budapest, refers to it as "fake news," according to Turkish media. Contrary to what Reuters reported, the expansion of the BYD plant in Szeged, southern Hungary, is proceeding as planned, says Joó, supporting his statements with photos of new BYD constructions.

Made in Türkiye

The construction of factories, however, does not necessarily indicate the volume of series production that will take place there. If the Reuters report proves true, BYD’s shift of focus to Turkey would be a setback for the EU tariff policy, which aims to encourage Chinese car companies to build factories within the EU through additional import duties on EVs.

The Turkish newspaper Türkiye Gazeti celebrated BYD's "made-in-Türkiye strategy," which it identified. Other Turkish media also hailed it as a milestone victory for the Turkish auto industry against competing locations like Hungary or other EU countries.

BYD Weighs its Options

For BYD, production plans for EVs in Europe are increasingly becoming a kind of balancing act. Lower labor costs favor Turkey, as well as the fact that EVs produced there can be exported to the EU without additional punitive tariffs from Brussels.

For BYD, the EU punitive tariff is 17 percent, which manufacturers must pay on imports from China in addition to the already existing base import tariff of 10 percent for all car imports into the EU.

Even if production in Turkey would be cheaper for BYD due to lower labor and energy costs, the company must still be careful not to lose the goodwill of the EU Commission and European governments if it wants to establish its brand on the continent in the long term.

European Headquarters in Hungary

According to Hungarian media, BYD's local representation in Hungary stated upon inquiry that the company's plans had not changed. The company is working on qualifying 150 Hungarian and European suppliers, and the plant in Szeged is still expected to have an annual peak capacity of 300,000 vehicles, reports the Hungarian news agency AA.

In May of this year, BYD announced plans to open its European headquarters in Budapest. Long before that, in 2016, the Chinese company invested in its first plant in Hungary, located in Komárom, where electric buses are manufactured. Since 2023, construction and preparation of BYD's first European factory for electric passenger cars has been underway in Szeged. Counting the headquarters and two assembly plants for battery systems in Fót and Páty near Budapest, BYD now has five sites in Hungary.

Likely Long-Term Commitment in Hungary

Hungary has been open to investments from China—and particularly from the automotive industry—for years. The national government also voted against extra tariffs on Chinese cars (alongside Germany, Malta, Slovenia, and Slovakia), which was very well received in China.

"The Chinese e-mobility technology is neither a threat nor a danger but an opportunity for development," the Chinese news agency Xinhua quoted Hungarian Minister of Economic Development Márton Nagy at the time.

Much suggests that BYD will maintain its commitment to Hungary, even if part of the planned production is indeed relocated to Turkey for cost reasons.

Machine Authentication

Machine Operator Authentication - Why knowing "who" matters