Key facts
- BYD has paused its planned $1 billion EV manufacturing plant in Turkey.
- BYD will instead focus on assembling EVs at a new plant in Hungary starting in Q4 2026.
- The decision to shift from Turkey to the EU is partly due to the EU's 27% tariff on Chinese-made EVs.
- China's embassy in Turkey is reportedly running a propaganda campaign to mitigate backlash from the BYD decision.
- Turkey plans to initiate legal proceedings to recover investment incentives from BYD.
China and Turkey's strategic partnership, built on trade and investment, is showing signs of strain following BYD's decision to halt a $1 billion electric vehicle (EV) manufacturing plant in Turkey. The deal, secured by President Recep Tayyip Erdoğan in July 2024, aimed to establish Turkey as an EV manufacturing hub. However, BYD has now paused the project, shifting its focus to assembling EVs in Szeged, Hungary, starting in the fourth quarter of 2026. This move is largely driven by the EU's 27% tariff on Chinese-made EV imports, which BYD can circumvent by manufacturing within the EU bloc. Turkey's Customs Union agreement with the EU proved insufficient to bypass these protectionist regulations. BYD's decision comes despite significant tax incentives offered by Turkey, which allowed the company to sell over 45,000 vehicles in the country in 2025 and generate substantial profits. In response to the stalled project and lack of progress, the Turkish Ministry of Industry and Technology has revoked BYD's import tax benefits. The fallout has led to a significant drop in BYD's local sales in Turkey, causing it to lose its top position in the plug-in hybrid segment to the domestic brand Togg. To mitigate the negative impact and safeguard its broader geopolitical objectives, Beijing has reportedly launched a charm offensive and propaganda campaign in Turkey. This includes placing unsigned promotional articles in pro-government media and organizing trips for Turkish journalists to Xinjiang, focusing on economic integration rather than human rights concerns. Experts suggest that Turkey's ongoing economic challenges will likely compel it to continue balancing its relationships with Beijing and Western allies, despite the diplomatic sting of the BYD situation. Turkey has also revealed plans to pursue legal action to reclaim investment incentives from BYD.