Chinese electric-vehicle giant BYD has scrapped its planned $1 billion factory in Türkiye. The company is now directing its European manufacturing investment toward Hungary instead, signaling a strategic pivot driven by shifting trade rules and the challenges of local production.
The abandoned Türkiye project
BYD had been eyeing a major production site in Türkiye, a country that straddles Europe and Asia and offers tariff-free access to the European Union through its customs union. The $1 billion plant, first announced last year, was meant to build EVs for both the Turkish market and export to Europe. But those plans are now dead. The company didn't give a public reason for the pullout, but the move comes as the EU tightens trade barriers against Chinese-made electric cars.
Why Hungary won out
BYD already operates a bus factory in Hungary and has been expanding its footprint there. Hungary offers a more direct route into the EU single market, with lower labor costs than Western Europe and generous government incentives for EV manufacturing. The shift reflects a broader recalibration among Chinese automakers: they want to sell in Europe, but they need to navigate new tariffs and localization requirements that make production inside the bloc more attractive than a factory on its edge.
Localization and trade complexities
The decision underscores how tricky it is to localize production in a region with evolving trade policies. Türkiye's customs union with the EU doesn't cover agriculture or services, and its relationship with Brussels has been strained. For BYD, building in Hungary probably looks like a safer bet — it's inside the EU, gives the company a clear “made in Europe” label, and avoids the risk of being hit by future anti-dumping duties on Chinese-assembled EVs. Other Chinese carmakers, including SAIC and Great Wall Motors, are also weighing similar moves as the EU investigates state subsidies for Chinese EVs.
What comes next
BYD hasn't released a timeline for the Hungary plant, but the company is expected to break ground later this year. The abandoned Türkiye site leaves local officials there without a promised investment — and raises questions about how many more Chinese factories will choose EU member states over neighboring partners.
