How China's BYD saw its $1bn Turkey EV plant deal unravel

How China's BYD saw its $1bn Turkey EV plant deal unravel Submitted by Ragip Soylu on Wed, 06/10/2026 - 13:46 After a high-profile launch with Erdogan, the promised Chinese electric car factory remains unbuilt and Ankara is weighing penalties against BYD Visitors speak inside a stand of Chinese automaker BYD at the Beijing Auto Show in Beijing on 25 April 2026 (Greg Baker/AFP) Off Once touted as a project that would help make Turkey one of Europe’s centres of electric car production, a 1.6 million-square-metre plot of land in Manisa has sat idle for the past two years, covered with grass and dirt. When President Recep Tayyip Erdogan appeared before cameras in July 2024 to announce that Ankara had secured a $1bn investment from Chinese EV giant BYD, officials were jubilant. Under the agreement, BYD committed to establishing a production facility for electric and plug-in hybrid vehicles with an annual capacity of 150,000 units, as well as an R&D centre focused on sustainable mobility technologies. The facility, which was expected to begin production by the end of 2026, was also projected to create up to 5,000 direct jobs. Now, however, BYD appears to have other plans. In an interview with Reuters, BYD executive vice president Stella Li said the company had paused work on a plant in Turkey while prioritising production in Europe. “Hungary is the number one priority right now,” she said. “The second priority will be to focus on finding a second production facility in Europe.” BYD’s apparent shift is a major embarrassment for the Turkish government. To attract the company, Ankara granted generous tax breaks on BYD car sales in Turkey even before construction of the plant had begun. 'Hungary is the number one priority right now... The second priority will be to focus on finding a second production facility in Europe' - Stella Li, BYD executive vice president Thanks to those incentives, combined with a new commercial strategy, BYD’s sales in Turkey surged to more than 45,000 vehicles in 2025. Experts estimate the company may already have earned between $500m and $1bn in additional profits from the Turkish market as a result of those tax advantages. In February, Turkish Industry Minister Fatih Kacir said the government could sanction the company for breaching the investment agreement and that monetary fines might be imposed. A Turkish source familiar with the matter told MEE that the penalties in the agreement were unlikely to cover all of the tax losses, though they could still be substantial. Turkish media reported that the fines could reach as high as $1bn, but many in Ankara consider that figure unrealistic. So how did the deal unravel? Investment suspicions In truth, it never got off to a strong start. Soon after BYD signed the agreement with Turkey, China’s Ministry of Commerce reportedly told more than a dozen automakers that advanced EV technology should remain in China. The ministry specifically mentioned Turkey and India, advising carmakers seeking to invest in Turkey to first notify the Ministry of Industry and Information Technology, which oversees China’s EV industry, as well as the Chinese embassy in Turkey. Venezuela’s Delcy Rodriguez to visit Turkey for talks with Erdogan Read More » According to several sources in Ankara, that move immediately cooled enthusiasm around BYD’s investment plans. China has traditionally viewed investment in Turkey with suspicion, and that stems from two longstanding issues. First, Chinese officials continue to express frustration over Ankara’s last-minute cancellation in 2015 of a $3.4bn deal to purchase Chinese air defence systems, after heavy pressure from the United States. They still cite the episode as evidence that Turkey is an unreliable partner. Second, China’s treatment of the roughly 12 million native Uyghurs - an ethnically Turkic group who are seen as kin by many in Turkey - has long complicated relations. Although Ankara has largely kept its criticism of China’s policies in Xinjiang behind closed doors, even as human rights groups describe them as genocide, that has not been enough for Beijing. Many had believed BYD was able to secure the investment agreement after Turkish Foreign Minister Hakan Fidan visited Xinjiang in June 2024, fulfilling a longstanding Chinese desire to showcase what it presents as normal life for Uyghurs. But it now appears that Beijing’s demands may have gone further, including the deportation of Uyghur leaders living in Turkey - something that would carry a steep political cost for Ankara and likely cross a domestic red line. The investment became even more complicated when the European Union last year began drafting “Made in Europe” legislation that could exclude vehicles produced in Turkey from major government tenders across the bloc. That would undermine one of Turkey’s key advantages as a manufacturing base: its customs union with the EU. European tensions Several European officials told MEE last year that they intended to ensure that electric vehicles produced in Turkey by Chinese companies would face restrictions in the European market. “No doubt, we will take absolutely necessary steps and produce regulation to force China not to use Turkey as only an assembly line but actually develop and produce components,” one European official said. Pakistan deployed 8,000 troops, a Chinese air defence system and warplanes to Saudi Arabia: Report Read More » Turkish lobbyists believe this is one of the reasons BYD began to reconsider the investment. One longtime observer of Turkey-China relations also told MEE that BYD could manufacture cars in Hungary and export them to Turkey without facing steep tariffs, thanks to Turkey’s customs arrangements with the EU. The Chinese government also signalled to Ankara that it wanted further concessions to move the BYD investment forward. In April, Jin Xin, vice minister for foreign affairs of the central committee of the Communist Party of China, told Turkish officials that Beijing had concerns about Turkey’s economic conditions. “He asked for additional measures to protect Chinese companies from fluctuations in foreign exchange rates, and for further tax advantages,” one person familiar with the issue told MEE. “He also sought to persuade the government to provide faster and simpler work visas for the Chinese workers and employers who would be based in Turkey.” Xin also claimed that Beijing was pressing BYD to accelerate the plant investment in Turkey, while adding that its hands were relatively tied because the company was “private”. It was an argument few in Ankara found convincing. “They basically tossed us aside,” the person said. Economy Ankara News Post Date Override 0 Update Date Mon, 05/04/2020 - 21:19 Update Date Override 0