BYD is prioritizing its Hungary factory over a planned $1 billion plant in Turkey as the Chinese EV giant accelerates European localization to bypass EU tariffs.
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BYD to start Hungary EV production in Q4 2026, suspends $1B Turkey plant
BYD Co. will begin complete vehicle assembly at its Hungary plant in the fourth quarter of 2026, Executive Vice President Stella Li said, while suspending a $1 billion factory project in Turkey to focus resources on European production.
"Currently, our company's primary priority is our investments in the Hungarian market," Li said in an interview in London. "Our second focus will be to find a suitable location for a second facility where we can produce across Europe."
The Hungary plant, located in Szeged, is on track to begin complete vehicle assembly in the fourth quarter of this year. BYD announced the Turkey project in 2024 with plans for an annual capacity of 150,000 vehicles and production originally slated for 2026. Construction never began at the Manisa site, and Li said there is no confirmed timetable for groundbreaking or production start.
The strategic pivot comes as the European Union imposes heavy customs tariffs on Chinese-origin electric vehicles, making local production essential for BYD to compete in Europe's EV market. BYD is also exploring acquisitions of idle factories from established European manufacturers including Stellantis and Volkswagen, with production facilities in Italy and France topping the shortlist, according to people familiar with the matter.
BYD's decision to prioritize greenfield development in Hungary over Turkey reflects the company's urgency to establish a European manufacturing foothold. The Szeged facility will serve as BYD's first wholly owned car plant in Europe, bypassing the 17.4% additional tariff the EU imposed on Chinese-built EVs last year.
The suspension of the Turkey project, valued at $1 billion with a planned 150,000-unit annual capacity, represents a significant shift in BYD's European strategy. Turkey's customs union with the EU would have offered tariff-free access, but the longer timeline for building a factory from scratch compared to acquiring existing facilities may have tipped the balance.
Acquisition Strategy Gains Urgency
BYD has intensified talks to acquire idle production capacity from European automakers, according to people familiar with the discussions. Facilities owned by Stellantis in Italy and Volkswagen in France are among the targets, offering BYD a faster route to production than building new plants. The company has not disclosed potential deal values or timelines for any acquisition.
The European Commission's anti-subsidy investigation into Chinese EVs, concluded in October 2024, imposed tariffs of 17.4% on BYD vehicles specifically, compared to 7.8% for Tesla and 21.3% for SAIC. Local production in Hungary would allow BYD to avoid these duties entirely for vehicles sold within the EU.
Investment Impact
BYD shares traded 2.5% lower in Hong Kong on Wednesday, with short selling accounting for 37.1% of turnover at $574 million, suggesting bearish positioning ahead of the announcement. The clarity on Hungary's production timeline provides supply chain visibility, but the Turkey suspension may raise questions about capital allocation efficiency and the pace of BYD's European expansion.
The company's European localization strategy mirrors moves by other Chinese automakers including SAIC Motor Corp. and Great Wall Motor Co., which have also announced European production plans to circumvent tariffs. BYD's advantage lies in its vertically integrated supply chain, including in-house battery production using LFP chemistry (lithium iron phosphate), which the company produces at an estimated $56 per kilowatt-hour — among the lowest costs in the industry.
This article is for informational purposes only and does not constitute investment advice.
