BYD plans to flood Europe with cheap electric cars. Will they succeed and beat European brands in their own territory?
Chinese electric vehicle manufacturer BYD will open a new factory in Turkey to expand its operations in the European market. The investment will cost $1 billion and will have a production capacity of 150,000 per year. The new factory will also include a research and development division.
BYD is the world’s largest EV manufacturer, overcoming Elon Musk’s Tesla earlier this year. It sells electric and hybrid vehicles but announced it will solely focus on the former in the coming years.
This is the latest expansion announcement for the Shenzhen, China-based company. Last week, BYD opened its first production plant in Thailand, acquired a Ford Motor production plant in Brazil last year, and is eyeing a new factory location in Mexico.
Last December, BYD announced it was scouting European countries to find the most suitable for a production plant. Another facility is already under construction in Hungary.
The facility, located in Manisa province, will start production by the end of 2026 and create approximately 5,000 new jobs.
BYD was one of the companies hit by an investigation probe by the European Commission last year. Starting on July 4th, BYD-branded vehicles produced in China will cost 17.4% more in addition to the already existing 10% tariff.
Turkey is part of the European customs union, hence EVs produced in the new facility will not be subject to EU duties.
A new era of electric cars
BYD is the largest car manufacturer in China and already sells some vehicles in Europe and the United States, although not very many. The Hungarian and Turkish factories are expected to drive BYD’s European market share to the stars.
The company will begin selling its cheapest model, the BYD Seagull, for €20,000. It will be the cheapest electric car on the European market. The price already factors in additional regulations and duties: the car retails for little less than $10,000 in China.
The European Union hosts the world’s largest car industry and its executives fear an invasion of cheap Chinese models. China is already the world’s largest EV producer, and legacy companies like Volkswagen and Mercedes lag far behind their Chinese counterparts.
European companies are acquiring several overseas EV start-ups, trying to merge their production capacity with innovative R&D. Most recently, Volkswagen invested $5 billion into Rivian, a San Francisco-based EV company.
It’s unclear how European companies will fare against Chinese competition in their own markets. BYD prices will be extremely competitive, and its electric models as efficient as European ones. Will the European competitive advantage in the car industry become a thing of the past?
