Chinese carmakers eye Turkey as production hub to bypass potential EU tariffs
On 14 May, the US announced it would raise the tariff rate on EVs imported from China from 25% to 100%. The European Union is considering a similar move to protect local EV manufacturers. However, industry heavyweights in China may have already found a solution. Multiple big-name Chinese automakers are considering setting up factories in Turkey and localising their EVs in the region.
Bloomberg reported last week following an interview with Fatih Kacir, the country’s Minister of Industry and Technology, that BYD and Chery are in high-level discussions with Turkey to invest in manufacturing facilities there and improve their sales in Europe. Turkey wants to conclude the discussions as soon as possible, Kacir said in the interview. The country is also talking with SAIC, which owns MG and Great Wall Motor, he added.
Turkey is already an advanced automotive production hub for many leading global brands, but it’s yet to go big on EVs. The advent of Chinese automakers may not only give its industry a significant boost with additional output but also prepare its local supply chain for Europe’s transition to EVs in the future. Kacir said Turkey is an optimal choice for exporting cars to Europe because of its customs union agreement.
With $35.7 billion of vehicle and spare part exports recorded, Turkey’s car industry ranked number 1 in the country’s exports in 2023. Compared to $21.6 billion a decade earlier, it is evident how the auto industry plays a big role in the nation’s economy. For BYD, the potential Turkish factory could be its second plant for passenger cars intended for sale in Europe. Just back in December, the company announced it will construct a vehicle factory in Szeged, Hungary.
German automakers don’t seem happy with the EU’s proposal to apply punitive taxes on EVs imported from China. The only purpose of raising import taxes is to protect an industry, but our industry doesn’t need protection, BMW Group Oliver Zipse said in the Q1 2024 earnings conference call. “There’s always some sort of retaliation,” a recent Reuters report quoted Volkswagen Passenger Cars CEO Thomas Schäfer saying at the Future of the Financial Times’ Car Summit 2024. It seems European automakers fear a blowback from China that could have a devastating effect on their EV investments and business there.
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