🚗 BYD Freezes Factory in Türkiye (Manisa) and Chooses Hungary: An Objective Breakdown
The news of the week for anyone considering Türkiye as a manufacturing hub. BYD has officially put its Manisa plant project ($1 billion, 150,000 vehicles per year, up to 5,000 jobs) on indefinite hold. The priority is Hungary: the Szeged plant, launching in the fourth quarter. Construction in Manisa never even began: since the signing in July 2024, there has been neither a foundation nor machinery on site.
Why did this happen, given that on paper Türkiye seemed logical? The main trump card was the Customs Union with the EU. However, rules of origin worked against it: when the share of Chinese components is high, the preferential status of the goods is called into question, and a car from Türkiye risks remaining "non-European." Hungary, on the other hand, offers an ironclad guarantee: if it rolls off an assembly line in the EU, it is legally an EU product, and no protective tariffs against Chinese electric vehicles apply to it. For a company that also needs the "Made in EU" label to gain the trust of European buyers, this is a decisive argument.
Next is the ecosystem. Szeged is already home to Audi, Mercedes, and CATL: ready-made suppliers, a trained workforce, and logistics in the center of Europe. In Manisa, all of this would have had to be built from scratch. Furthermore, Hungary offered BYD not just a construction project, but an R&D package: European headquarters in Budapest, around 250 million euros for development, agreements with universities, and a commitment to register half of the patents in the country. Türkiye was offered assembly; Hungary secured the brains.
And now for the most intriguing part. On the promise of the factory, BYD secured an exemption from the additional 40% import duty on Chinese vehicles and smoothly sold 45,500 cars in Türkiye in 2025, becoming a leader in its segments. The factory was not built, yet the tax incentive was fully utilized. The opposition is already calculating lost budget revenues. However, the market responded in its own way: this year, BYD sales in Türkiye plunged by almost 64%, and local brand Togg surpassed it.
Key takeaways for investors. First, the Customs Union is not EU membership, and for tariff-sensitive manufacturing operations, this difference can destroy the entire business case; verify rules of origin before falling in love with a location. Second, incentives granted on the promise of future production are a tool that major players know how to leverage far better than governments; keep this in mind both when reading other parties' investment announcements and when planning your own. And third, Türkiye remains a formidable platform where the ecosystem already exists (commercial vehicles, components, textile machinery), but "paper" megaprojects with zero construction are a separate genre entirely, and should be treated accordingly.