China’s BYD is poised to build $1 billion EV plant in Turkey

Turkey will soon unveil an agreement with BYD Co. to construct a $1 billion plant in the west of the country, Turkish officials said, boosting the Chinese carmaker’s presence in Europe at a time of escalating trade tensions.

Turkey’s President Recep Tayyip Erdogan is expected to announce the accord on Monday during a ceremony in Manisa province, where the plant will be built, the officials said, asking not to be named because they aren’t authorized to speak publicly. BYD representatives and the president’s office declined to comment.

The new factory would improve BYD’s access to the European Union, because Turkey has a customs-union agreement with the bloc. The EU moved ahead this week with plans to impose provisional tariffs on electric vehicles imported from China, hitting BYD with an additional 17.4% charge on top of the existing 10% rate.

There’s also a domestic market to serve, with EVs accounting for 7.5% of car sales last year in Turkey, a country with a population of almost 90 million.

Turkey announced Friday that it was walking back plans announced almost a month ago to impose an additional 40% tariff on all vehicles from China, citing efforts to encourage investment. That decision followed talks between Erdogan and China’s President Xi Jinping on Thursday during a meeting of the Shanghai Cooperation Organization in Astana, Kazakhstan.

BYD has been on a tear the last several years in China, becoming the nation’s best-selling car brand. The Shenzhen-based manufacturer has vowed to bring its lower-priced EVs to Europe in the coming years, including the Seagull hatchback that executives expect to sell for less than €20,000 ($21,700).

The automaker opened its first EV plant in Southeast Asia on Thursday, in Thailand. BYD has also taken over a former Ford Motor Co. factory in Brazil and been scoping out locations for a plant in Mexico. Its first car factory for Europe, in Hungary, is under construction.

BYD’s sales jumped to a record 982,747 vehicles in the second quarter, up more than 40% from a year ago. While the company’s sales in Europe have been sluggish thus far, it’s mounting a major marketing push in the region, taking Volkswagen AG’s place as a main sponsor of the European Championship football tournament.