Turkey is in negotiations with Chinese electric vehicle (EV) companies to boost investment in the country''s own burgeoning EV sector, according to a Friday report, as Ankara seeks to boost this growing sector.
Turkish Industry Minister Fatih Kacir told Bloomberg that negotiations are at an advanced stage with Chinese EV manufacturersBYD Co.andChery Automobile Co. Ltd. for investments in factories in Turkey. Kacir said Turkey "would like to complete the talks as soon as possible."
Ankara is also in separate talks with Chinese EV makers SAIC Motor Corp. and Great Wall Motor Co., Kacir told the outlet.
Chery and SAIC are both state owned, while BYD is publicly traded. Great Wall Motor is a private company.
Turkey is additionally seeking to attract American EV giant Tesla. During a September meeting in New York, Turkish President Recep Tayyip Erdogan invited Tesla CEO Elon Musk to build a factory in the country. Musk and Erdogan are friendly. In late 2021, SpaceX, also founded and led by Musk, launched a Turkish satellite into orbit.
The companies with which Turkey is in talks were all among the top 25 EV firms in terms of sales last year, according to the EV Volumes database, and could mean significant investment. BYD was the leading EV seller in 2023, but lost the top spot to Tesla during the first quarter of 2024, Reuters reported.
For China, producing EVs in Turkey could provide it better access to the European market due to Ankara''s customs union agreement with the European Union, as noted by Bloomberg. Turkey is the EU''s seventh-largest trading partner, accounting for 3.3% of its internal trade, according to bloc statistics.
China might now be especially interested in boosting EV sales in Europe by way of Turkey due to a recent move by the United States. Earlier this week, the Biden administration imposed a 100% tariff on Chinese EVs, making it difficult for the automobiles to enter the American market.
Know more: There is growing competition in the Middle East to develop electric vehicles, a sector where China is increasingly dominating. In February, a subsidiary of the Chinese EV maker Nio Inc. signed a technology licensing agreement with Forseven Ltd., an electric vehicle subsidiary of Abu Dhabi–based CYVN Holdings. The move built on previous cooperation between EV-related entities in China and the United Arab Emirates.
Meanwhile, Turkey faces competition in its bid to lure Tesla. In an October Al-Monitor Pro memo, Samuel Wendel reported that Saudi Arabia is offering Tesla incentives to produce vehicles in the kingdom.
In a significant move impacting the global automotive market, Turkey has announced imposing a 40% additional tariff on vehicle imports from China.
The decision represents a strategic shift in Turkey's trade policy, aiming to protect its burgeoning domestic EV industry and address trade imbalances with China.
The new tariffs will apply to both conventional and hybrid passenger vehicles, with a minimum tariff set at US$7,000 per vehicle.
Several vital factors drive Turkey''s decision to impose tariffs on Chinese EVs. Firstly, it aims to protect and promote its nascent electric vehicle sector. The country has been actively investing in its automotive industry, with a focus on developing domestic electric car manufacturing capabilities.
By introducing tariffs on Chinese EVs, Turkey seeks to give local manufacturers a competitive edge, allowing them to grow and innovate without facing overwhelming competition from established Chinese brands.
The Turkish Trade Ministry outlined, "Our goal is to reduce the current account deficit and encourage more domestic investment and production in the automotive sector."
Secondly, the tariffs address the trade imbalance between Turkey and China. Chinese goods, including EVs, have significantly contributed to Turkey''s growing trade deficit. By imposing tariffs, Turkey hopes to reduce this imbalance and encourage a more reciprocal trade relationship.
New tariffs are expected to have immediate and long-term effects on the Turkish market. In the short term, the prices of Chinese EVs in Turkey will likely rise, making them less attractive to consumers. The price increase could drive demand for domestically produced electric vehicles, boosting local manufacturers.
In the long run, the tariffs could stimulate investment in Turkey''s EV industry. As local companies gain a larger market share, they will have more resources to invest in research and development, leading to innovations and improvements in the quality and efficiency of Turkish EVs. This growth could position Turkey as a significant player in the global EV market, particularly in the Middle East and Europe.
Turkey''s move to impose tariffs on Chinese electric cars reflects broader trends in global trade. Many countries are re-evaluating their trade policies in light of increasing economic nationalism and concerns about over-reliance on Chinese manufacturing.
The COVID-19 pandemic has further highlighted the vulnerabilities associated with global supply chains, prompting nations to seek greater self-sufficiency in critical industries, including automotive manufacturing.
Moreover, Turkey''s tariffs align with similar measures taken by other countries. The European Union, for example, has been contemplating tariffs on Chinese EVs to protect its automotive industry. By joining this trend, Turkey aligns itself with broader international efforts to ensure fair competition and foster domestic industry growth.
Despite the potential benefits, Turkey''s tariffs on Chinese vehicles are not without challenges and criticisms. Some industry experts warn that the tariffs could lead to higher consumer prices, reducing the affordability of EVs and potentially slowing the adoption of green technology.
Additionally, there is the risk of retaliatory measures from China, which could impact other sectors of the Turkish economy.
Critics argue that protectionist policies can sometimes lead to complacency among domestic producers, reducing the incentive to innovate and improve.
To avoid these pitfalls, Turkey will need to ensure that its domestic EV industry remains competitive on a global scale through continuous investment in technology and quality improvements.
Turkey''s imposition of a 40% tariff on vehicle imports from China is a strategic move aimed at protecting and fostering its domestic EV industry while addressing trade imbalances. While the tariffs are likely to bolster local manufacturers and stimulate investment in the long term, they present challenges that will need careful management. As Turkey navigates these complexities, its actions will be closely watched by other nations grappling with similar issues in the evolving global trade and industry landscape.
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(Bloomberg) — Turkey will soon unveil an agreement with Chinese electric vehicle (EV) maker BYD Co. Ltd. for the construction of a $1 billion plant in the west of the country, Turkish officials said.
Recep Tayyip Erdogan, the Turkish President, is expected to announce the deal on Monday during a ceremony in the central Turkish province of Manisa, where the plant will be built, the officials said. BYD, China''s best-selling EV brand, and the Turkish presidency declined to comment.
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