How Erdogan and BYD plotted revenge against EU EV plans

Turkish government officials are claiming that the Chinese EV giant BYD will establish a $1bn factory in the country as it continues to expand globally. The official announcement will be made by President Erdogan, for reasons I will later explain in the article.

The move comes at an interesting time as Chinese EV companies face problems operating in Europe. Just a few days ago, Europe slapped tariffs on Chinese EV makers in a bid to control their influence in Europe.

An EU investigation recently concluded that Chinese companies are funded by the state which gives them an unfair advantage over other companies that are operating in Europe.

Even though the tariff news comes as a blow to many companies, it is not stopping them from continuing their expansion plans.

NIO just opened two new showrooms in Germany despite a recent setback of its CFO's resignation. BYD itself announced last year that it was considering establishing a factory in Hungary.

Chery Auto, which also happens to be China's largest EV player in terms of export volume, recently decided to set up a plant in Spain. Its long term plans also include setting up a factory in Britain.

XPeng and Geely have also announced similar plans. As the Chinese EV sales in Europe soar, local players need their own government's help, which is coming in the form of tariffs on Chinese made EVs.

Why Turkey?

There is a good reason why an EV plant in Turkey benefits both the country and BYD. To understand the Turkish context, we will have to go back a few years when Volkswagen paused its plans for a $1.4bn investment in Turkey.

That move was politically motivated due to Turkey's involvement in the Syrian war. Later, the German carmaker blamed it on the Covid19 pandemic and completely dropped its plans.

That move has come back to haunt the Germans as the same land that was supposed to be used for the VW plant will now be used for the BYD plant. BYD will also be able to circumvent a 40% tariff on EV imports that the Turkish government has currently in place.

And there's more. The region where this factory will be set up allows for tariff-free import into Europe. So with one move, both BYD and the Turkish government have played their cards. This is why President Erdogan wants to milk the situation for political point scoring. It is now up to the European governments to tackle this and stop the Chinese EV dominance.

Meanwhile, BYD continues to expand globally. It recently opened a factory in Thailand and is working out the details of launching its cars in Pakistan, the 4th largest Asian country by population.