The Chinese automotive giant BYD's investment in Turkey continues to become an intractable issue. BYD had committed to establishing a production facility in Manisa with a 1 billion dollar investment and received tax incentives for these commitments. However, the company's failure to take concrete steps for the facility had drawn attention. Now, according to journalist Fatih Altaylı's assessment, a very large fine could be imposed on BYD.
Tax Advantage Was Limited by Quota
Under the agreement signed on July 8, 2024, BYD was granted tax reductions for vehicles it would import until the factory's establishment was complete. However, this right was not unlimited; it was restricted by a specific import quota. Accordingly, the brand could offer a limited number of vehicles to the Turkish market with preferential terms until production began.
Within the framework of the same agreement, BYD was expected to establish a production facility with an annual capacity of 150,000 vehicles and an R&D center with a 1 billion dollar investment, create approximately 5,000 jobs, and complete the project within one year.
According to Altaylı's article, no concrete progress has been made on the investment front during the elapsed period. It is stated that almost two years later, no construction activities have begun for the facility. The most tangible result of this situation was the exhaustion of the import quota.
With its right to import tax-advantaged vehicles expired, BYD experienced a sharp decline in sales due to difficulties in new vehicle supply. The Ministry is reportedly reluctant to grant a new quota under current conditions, citing the failure to fulfill the investment commitment as the reason.
$1 Billion Fine Claim
According to Altaylı, Turkey is preparing to impose a serious fine on BYD due to the non-fulfillment of the agreement terms. This fine is stated to be at the same level as the investment amount, approximately 1 billion dollars.
BYD, on the other hand, argues that the delay in investment is beyond its control. The company reportedly claims that the Chinese government has not given the necessary approval for the planned investment in Turkey. However, there is no official explanation regarding the reasons behind this situation. Another striking claim is that the investment might be shifted outside of Turkey. The article states that BYD's planned production facility might be directed to Hungary, where the company had already started initial trial productions at its facility.
Minister of Industry and Technology, Mehmet Fatih Kacır, had stated in February that sanctions would be applied if BYD's investment in Turkey was not completed within the foreseen period:
"The period for the completion of the said investment is ongoing. Monitoring and auditing activities are being carried out meticulously by our Ministry within the framework stipulated by the investment incentive legislation for the completion of the investment as foreseen.
The sanctions to be applied to investors if the investments supported under our incentive system are not completed as foreseen are regulated in our legislation. These sanctions are also valid for the investment in question. Furthermore, our country's interests have been protected through collateral mechanisms."
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