Chinese carmaker BYD suspends major project in Turkey

• Company shifts focus to Europe
• Turkish EV hub efforts in jeopardy
• Move stems from EU tariff hike

Chinese carmaker BYD has suspended plans to develop a major production facility in Turkey, shifting its focus directly to Europe in a move that could weaken Turkish efforts to become a leading hub for electric vehicle (EV) manufacturing.

Company vice president Stella Li told Reuters on June 9 that BYD had put on hold plans for a $1 billion plant in the Aegean province of Manisa. BYD is instead looking to develop capacity at a factory in Hungary, with the first compact EV due to roll off assembly lines by year-end.

The reasoning behind producing in Europe, rather than in nearby countries such as Turkey, stemmed from increases in EU tariffs on imported electric and hybrid vehicles, which reduced the cost effectiveness of the Manisa project.

The decision to halt development of the Manisa plant, announced in mid-2024 and initially intended to come on line by the end of this year, arrives as a blow to the Turkish automotive and technology sectors.

Under the proposal, when fully operational the factory would have provided jobs for 5,000 people and have the capacity to turn out 150,000 electric and hybrid vehicles a year, with most intended for export.

Though Li did not rule out developing production capacity in Turkey at a future date, the company is also looking to expand its exposure further in Europe, including taking up factory space at an existing plant in Germany.

Despite reports as recently as February that the proposed investment was under threat, trade minister Ömer Bolat had given assurances in the media that the plant was proceeding, saying there was “no problem” and that talks on the project were ongoing.

Wide impact

The loss of the BYD investment will impact a range of segments across the auto industry and beyond, Anıl Şentürk, chair of the automotive committee at the Istanbul Chamber of Commerce, told AGBI.

“There would have been benefits for supply chains, jobs, research and development, battery production, side industries as well as AI, so many diverse contributions,” he said.

“This was a direct foreign investment so its contribution would not have only been to the automotive sector but the country’s economy itself.”

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Delaying or cancelling the Manisa plant could also expose BYD to legal action from the Turkish government, which had provided the company with an exemption on most import tariffs in return for the commitment to invest in Turkey.

That exemption has seen BYD build a strong position in the Turkish auto market, with its vehicles taking a 24 percent share of EV and hybrid sales last year.

“If the decision is final, BYD will most likely be stripped of their advantages in the local market and potentially lose this market to other Chinese competitors or European models,” Şentürk said.