Chinese electric vehicle (EV) manufacturer BYD inked a deal with the Industry and Technology Ministry to invest $1 billion to set up a manufacturing plant in Türkiye as it continues to expand beyond its home country, which also indicates the strong position and potential of the Turkish market.
Turkish officials hailed the move as “historic” that came at a time when “the investment environment was improving,” with the deal garnering significant attention in the international media as well.
First reported by Bloomberg last Friday, the official agreement on the deal was signed in a ceremony in Istanbul held on Monday. It sees the Chinese EV maker building a plant with an annual capacity of 150,000 vehicles, as well as a mobility and R&D center with a total investment of $1 billion, the ministry said.
This marks one of the largest investments in the Turkish automotive sector in the recent period and comes on the back of Türkiye’s efforts to enhance domestic production, which came to the fore, particularly with the rolling of the country’s EV maker Togg from the production line to thousands of users across the nation.
Let’s look into the details and how it impacts the country’s already strong standing as a production hub.
What does the deal represent for Türkiye?
The plant to be built by BYD, one of the world’s largest EV makers, along with Elon Musk’s Tesla, positions Türkiye in the spotlight of becoming a potential electric vehicle hub in the future, aligning with the government’s green technology agenda.
The firm is expected to begin production at the end of 2026 and create 5,000 jobs directly in the country, thus also providing additional employment opportunities. This would also be the first EV factory by a foreign manufacturer in Türkiye and is seen as an opportunity for BYD to boost its prospects for positioning itself better in the European market.
“We are pleased that BYD, the leading global brand in electric vehicle and battery technologies, has decided to invest in our country,” Industry and Technology Minister Mehmet Fatih Kacır said in a press release on Monday.
“This investment decision is the product of long-standing discussions and consultations since our visit to China in December, where we personally witnessed BYD producing 32 patents a day with its 110,000 engineers,” he said.
Türkiye to become a hub?
Kacır also said that Türkiye’s efforts to bring new technologies and R&D highlight “its potential to become not only a hub for international investments, but also a center of innovation and advanced green technology.”
“This investment for producing new generation vehicles with high domestic added value will strengthen our automotive industry,” he said.
Türkiye, the third-largest automobile manufacturer in Europe, sees the transformation towards next-generation, environmentally friendly electric vehicles as a priority target in the automotive sector, which is the leading Turkish export sector, he underlined.
Indeed, the Turkish automotive sector, often dubbed “the locomotive” of Turkish exports, maintained its leading position in outbound shipments in the first half of the year with $17.7 billion in revenues, according to recently published industry data.
Attractive investment climate
Vice President Cevdet Yılmaz said on X this new investment marks Türkiye’s improved investment climate.
“We expect this investment to make a significant contribution to our exports in the medium term and further reduce our already shrinking current account deficit,” he added.
Trade Minister Ömer Bolat also said BYD’s investment is a strong indicator of the opportunities offered to investors by Türkiye, which is one of Europe’s key automobile production hubs, with its attractive investment climate, strong production, qualified workforce, effectively implemented customs union and a wide network of free trade agreements.
“In coordination with all relevant institutions, the Trade Ministry will continue to contribute to our country’s policies based on projections for direct investments in line with our domestic production, employment and export targets,” he added.
Proximity to Europe
Türkiye, a significant automotive producer, has boosted its output over the years and lifted it to some 1.47 million units last year, with cars accounting for the largest chunk of it or nearly 70%.
Turkish-made cars enjoy beneficial access to the EU under a customs union that dates back to 1995, and the Marmara region around Istanbul has become one of the leading centers in the world’s automobile industry.
Major carmakers including Fiat and Renault opened plants there at the beginning of the 1970s, with others like Ford, Toyota and Hyundai following, taking advantage of Türkiye’s position at the crossroads between Europe, Asia and the Middle East.
BYD, backed by veteran U.S. investor Warren Buffett, is expected to take advantage of Türkiye’s proximity to the European market and the numerous advantages it offers.
“Thanks to Türkiye’s unique advantages, such as its developing technology ecosystem, strong supplier base, extraordinary location, and skilled workforce, BYD’s investment in this new production facility will further develop the brand’s local production capabilities and increase logistical efficiency,” the automaker said in a statement.
The statements on Monday did not disclose the location of the plant to be built, but earlier media reports indicated it would be in the western Manisa province.
Tariffs pressure
However, the mega-investment of the automaker comes at the top of tariffs Chinese manufacturers are facing, including those imposed by the EU last week and the ramped-up measures by the Biden administration earlier this year.
Türkiye similarly last month announced an additional 40% tariff on Chinese vehicles but eventually eased them, exempting automakers with investment incentives from it. On Monday, SWM, another Chinese automaker, announced it was applying to build a factory in Türkiye.
Turkish total car sales hit a record figure, surpassing 1.2 million units last year, with some 65,000 EVs being sold in the country throughout the year. The significant boom in EV sales positioned Türkiye at the top among European peers, with Togg only delivering nearly 20,000 units last year.
BYD (“Build Your Dreams”) entered the Turkish market in the fall of last year. In the first six months, it sold some 1,426 units of two models, BYD ATTO 3 and hybrid BYD SEAL U DM-i, according to Anadolu Agency (AA).
The significance of the investment by BYD also stands out as German auto giant Volkswagen, in recent years, scrapped plans to break ground in Türkiye, and as often reported possibility of clinching a deal for a plant with Tesla was also not realized.
The BYD deal garnered significant interest, with major international publications, from The Financial Times to BBC News reporting it.
