Author丨Pan Lei
Editor丨Sea waist
Source丨Midjourney
Chinese car companies have found a European version of "Mexico", and finally added an "insurance" to the seemingly inevitable European electric vehicle tariffs.
This European version of Mexico is none other than Turkey.
Earlier last month, Turkey announced that it had signed an agreement with BYD, the world's largest electric vehicle company, to invest $1 billion in Turkey to land an electric vehicle plant with an annual capacity of 150,000 units, as well as a research and development center.
The plant will be operational in 2026 and will provide approximately 5,000 jobs.
But almost at the same time, Turkey revised its decision to impose additional tariffs on imported products, so that Chinese automakers investing in Turkey will not pay the previously stipulated 40% additional tariff, but only pay 10% tariff.
This is equivalent to BYD's investment of $1 billion in exchange for exemption from import tariffs on automobiles.
For BYD, this is a good deal.
Because this is not only about a potential market with a size of more than one million units (about 1.233 million cars sold in Turkey in 2023, according to the Turkey Automobile Distribution and Mobility Association), but also about the entire EU market - Turkey and the EU have a tax union agreement, and the vast majority of exports have zero tariffs.
In 2023, 10.5 million passenger cars will be sold in the EU (according to the Association of European Automobile Manufacturers (ACEA).
This makes Turkey a sweet spot in the wave of Chinese cars "going to sea".
In addition to BYD, which announced a large investment, Chery, SAIC, Great Wall, SWM (Sway Automobile) and others are all discussing the establishment of factories with Turkey.
What Chinese car companies want, Turkey has
"The investment from BYD will strengthen our automotive industry."
Turkey Minister of Industry and Technology Mohammed ·Fatih · Gary Cahill said in an official press release that Turkey is Europe's "third-largest car manufacturer."
However, some data show that if the production in 2023 is calculated, the automobile production of Germany, Spain and France will exceed that of Turkey.
However, it should be noted that France has only about 40,000 more units than Turkey.
Together with commercial vehicles, Turkey's vehicle production in 2023 reached 1.46 million units.
What the minister really cares about is that investment from Chinese car companies can promote the transformation and upgrading of Turkey's automotive industry.
Because for now, foreign brands dominate the Turkey market.
Among the top 10 brands in Turkey's car market in 2023, European brands account for seven, Japanese and Korean brands each have one (Toyota and Hyundai), and Ford of United States also occupies a spot.
The combined market share of the top 10 brands reached 72.6%.
Turkey's local brands (TEMS or BMC, etc.) are basically concentrated in the field of commercial vehicles and special vehicles.
But now Turkey has always wanted to build its own electric car brand, and sees it as a major opportunity to promote the rise of Turkey's automotive industry.
Unlike the advantages of European and American auto giants in the field of fuel vehicles, only China's intelligent car industry chain can help Turkey.
At the same time, Turkey's automotive industry is also export-oriented.
According to data released by the Uludar Automotive Industry Exporters Association (OIB) in Turkey, the international sales of the Turkey automotive industry reached $35 billion in 2023, a year-on-year increase of 13%.
Turkey's exports to traditional automotive powerhouses such as Germany, France, Spain and Italy have all increased significantly (the lowest increase is 11% in Germany).
It is worth mentioning that Turkey's exports to Russia's automobile-related industries also increased by 42% year-on-year.
On the other hand, Turkey's exports to NAFTA fell by 22.5%.
But at least this shows that Turkey's exports of automotive industry products not only cover the European market (including Russia), but also have "channels" for the North American market.
As a result, Turkey is expected to become a transshipment center across Europe and the United States.
This is quite attractive for Chinese car companies.
Chinese cars were once more expensive than Tesla
From the perspective of market structure alone, the Turkey automotive market is likely to be on the eve of an explosion of electrification.
Data shows that although only about 66,000 electric vehicles were sold in the Turkey car market in 2023, this is nearly 9 times the 7,540 units in 2022.
The penetration rate of electric vehicles is also showing a trend of simultaneous and rapid growth.
The EV penetration rate in Turkey will be 6.8% in 2023 and 1.2% in 2022.
BMI, a research arm owned by Fitch, predicts that the penetration rate of electric vehicles in Turkey is expected to reach 30.4% by 2032.
Even in 2023 car sales, this means about 375,000 units of potential sales.
This figure does not include sales for the European market.
In addition, Turkey had more than 120,000 charging stations at the end of last year, which is equivalent to a certain electric vehicle infrastructure.
From a population perspective, Turkey has a population of 85 million, the second most populous country in Europe after Russia, and the GDP growth rate in recent years has been more than 5%, and the potential of automobile consumption cannot be underestimated.
This has made Chinese car companies see great potential.
Taking BYD as an example, it will only sell 839 cars in Turkey in 2023, ranking 37th among all brands, but this has not affected BYD's $1 billion in Turkey.
Chery's best-selling company in Turkey during the same period ranked 11th with 41,000 new cars sold.
SAIC MG sold 14,000 units, ranking 20th.
However, it is clear that Chery is mainly based on gasoline vehicles, while MG is opening the market with European brands, and China's electric vehicle competitiveness has not been fully demonstrated.
In addition, Dongfeng and Hongqi are also expanding the Turkey market.
According to a person related to Skyworth Automobile, one of Skyworth's electric vehicles was once rated as "Electric Vehicle of the Year" and ranked third in the list of best-selling electric vehicles in the first half of 2023.
Skyworth's Turkey dealers are even selling electric vehicles to European countries such as Portugal, Hungary and Croatia.
Wu Longba, president and co-founder of Skyworth Automobile, said in July last year that Skyworth surpassed Tesla's Model Y in terms of sales and price in the Turkey market.
"Our cars were sold for about 1.6 million lira, which is equivalent to between 450,000 and 480,000 yuan."
He said it had to do with the product.
"In the development stage of our models, we must meet both the national standard and the European standard."
He believes that the local people's recognition of Chinese brands is relatively high, which has also helped to increase the sales of electric vehicles in China.
In addition, Skyworth's ability to sell at a high price in Turkey also shows that the development of the local electric vehicle industry chain is not perfect, resulting in high costs.
The Turkey government wants to solve this problem, so it has the operation of first imposing tariffs on Chinese cars, and then providing exemptions to car companies that have built factories.
"Turkey Path"
Turkey's relationship with the EU is currently not comparable to that of the USMCA (USMCA), which Turkey has not yet joined.
But for Chinese automakers, this is not a problem.
In addition to the tax union agreement between Turkey and the EU, which allows automotive products produced in Turkey to be sold in the EU, it is important that Turkey does not have any other "add-on" requirements.
For example, the European Commission previously launched a countervailing investigation into China's electric vehicles, and the reason for the investigation was that the latter was "threatening" to related industries in the EU.
After assigning the "threatening" label to China's electric vehicles, the European Commission's investigation is starting to get ridiculous.
For example, Chinese companies are required to hand over battery formulas, and so on.
This has turned the EU's countervailing investigation into a form of protectionism.
But for Turkey, there are no similar concerns.
Of course, Turkey also wants to develop its own electric vehicle industry, such as Turkey Automotive United Holding Group (TOGG), which is discussing a joint venture with GAC.
TOGG is also regarded as Turkey's "new car-making force", and its power battery supplier is said to be the Chinese company Funeng Technology.
Under this joint venture model, Turkey, as an importer of technology or products, will not consider Chinese car companies "threatening".
In addition, Turkey's accelerated cooperation with Chinese car companies is also related to the previous "divestment" of European car companies.
In mid-2020, the Volkswagen Group canceled a project for an automotive plant in Turkey with a planned investment of 1.3 billion euros.
Turkey, which originally saw the investment as a landmark project to boost its automotive industry, was unhappy with the cancellation of the project.
After Volkswagen is not optimistic about the development prospects of Turkey's automotive industry, the latter looks for opportunities from Chinese car companies, which is obviously a good choice.
So far, through a series of tariff increases and tariff exemptions, Turkey has finalized BYD's order.
As more car companies and industrial chain enterprises land in Turkey, Chinese car companies have gone overseas to Europe and have found a "Turkey path" similar to Mexico's role.