BYD, a leading Chinese electric vehicle manufacturer, is making strategic adjustments to its production plans in Europe, according to a recent report by Reuters. The company has decided to delay mass production at its new EV plant in Hungary until 2026 and will initially operate the facility below capacity for the first two years.
The $4.64 billion plant located in Szeged, southern Hungary, was originally expected to have a production capacity of 150,000 units per year, eventually ramping up to 300,000 units. However, sources familiar with the matter revealed that production at the Hungarian plant will only reach a few tens of thousands of units in its first year of operation.
Despite the delays in Hungary, BYD is accelerating its plans for a new factory in Turkey. The lower labor costs in Turkey make it a more attractive option for the company, prompting an earlier start to production than initially planned. The Turkish plant is expected to exceed its announced production targets and will likely surpass the output of the Hungarian facility next year.
The move to prioritize production in Turkey over Hungary presents a challenge for the European Union, which has been aiming to attract Chinese investment by imposing tariffs on Chinese-made EVs. BYD’s $1 billion plant in Turkey, scheduled to begin production by the end of 2026, will produce a range of electric vehicles, including the Seal U SUV and two plug-in hybrid models.
The decision to shift production to Turkey reflects the difficulties faced by Chinese automakers in navigating the high wages and energy costs in Europe while trying to avoid punitive tariffs. The EU recently implemented additional tariffs on Chinese EV imports, with BYD facing a tariff rate of 17.0 percent on top of the original 10 percent.
In addition to its manufacturing facilities, BYD is also investing in a research and development center in Turkey to further strengthen its presence in the region. The company’s strategic adjustments in Europe aim to optimize production efficiency and navigate the complex regulatory landscape to ensure the continued growth of its EV business.
As BYD navigates the evolving EV market in Europe, its focus on cost-effective production and strategic investments will play a crucial role in shaping its competitive advantage in the region. The company’s commitment to innovation and sustainability underscores its position as a key player in the global electric vehicle industry.
