Chinese EV Giant BYD Aims to Bypass EU Tariffs Through Turkish Factory

According to a report from the Polish Economic Institute (PIE), Chinese electric vehicle manufacturer BYD is planning to export 75,000 electric cars annually to the EU market from its factory in Turkey. This move appears to be a strategic attempt to circumvent tariffs imposed by the European Commission on Chinese EV imports, as reported by TVP World.

Leveraging Turkey’s Customs Union with EU

BYD intends to take advantage of the customs union between Turkey and the European Union, which has been in place since 1995. This agreement allows for tariff-free export of industrial goods from Turkey to EU markets.

“The Chinese investor plans to leverage the customs union that has connected Turkey and the European Union since 1995 in two categories of goods—industrial products and agri-food processing,” PIE Weekly stated.

Tariff Jumping: A Growing Trend

BYD’s strategy is part of a larger trend known as “tariff jumping,” where Chinese EV manufacturers are seeking ways to enter the EU market while avoiding the tariffs introduced in July 2024. Other examples include:

• BYD’s announcement to build a factory in Szeged, Hungary
• A partnership between Chinese company Chery and Spanish car manufacturer Ebro to produce EVs at former Nissan facilities

Turkey’s Rising Attractiveness for Investors

Turkey has become increasingly popular among foreign investors. The 2023 EY Europe Attractiveness Survey ranked Turkey 4th on the continent for greenfield projects, with 375 initiatives. This surge in popularity is attributed to President Erdogan’s return to “orthodox economic policy after the 2023 presidential election,” according to PIE analysts.

EU’s Temporary Tariffs on Chinese EVs

In July, the European Commission imposed temporary tariffs on three Chinese companies:

• BYD: 17.4%
• Geely: 20%
• SAIC: 38.1%

These tariffs were implemented to level the playing field between subsidized Chinese enterprises and local European manufacturers. However, the decision on permanent tariffs is still pending, with a vote expected in October.

EVXL’s Take

BYD’s strategic move to establish production in Turkey highlights the evolving landscape of the global EV market. As Chinese manufacturers seek to expand their presence in Europe, we’re likely to see more innovative approaches to navigate trade barriers. This development aligns with the broader trend of increased competition in the EV space, where established players like Tesla are facing growing pressure from new entrants. As the industry continues to evolve, it will be crucial to monitor how these strategies impact the European EV market and local manufacturers.