BYD Agrees to $1 Billion Tariff-Dodging Car Plant in Turkey

BYD is planning to set up a car production plant in Turkey as a way of sidestepping any European Union import tariffs.

That’s because, while Turkey is not a member of the EU, it is part of the trading bloc’s customs union and can import products tariff-free, BBC News reports. The Chinese automaker has signed a $1 billion deal to build a factory capable of producing up to 150,000 units annually, according to Turkish state news agency Anadolu.

The plant is expected to create about 5,000 jobs and start production by the end of 2026.

While BYD has only been threatened with the EU’s lowest proposed new tariff rate of 17.4% on top of the existing 10% duty, the Turkish move will allow it to sell vehicles in the EU with price tags more than 25% lower, allowing a considerable commercial advantage.

The Turkish government has also acted to support its own car manufacturers by placing an extra 40% tariff on vehicles made in China.

BYD has already announced it will build a manufacturing plant in EU member state Hungary. It will be the company’s first passenger car factory in Europe and is expected to create thousands of jobs.

Clearly displaying global manufacturing ambitions, BYD has just opened a plant in Thailand, of a similar size to the one planned for Turkey, and plans to add another one in Mexico.