Chinese electric vehicle giant BYD is contemplating Germany as a potential location for its third assembly plant in Europe, as reported by a source familiar with the matter to Reuters. This consideration follows Germany's opposition to EU tariffs on China-made EVs last year, indicating a strategic alignment with the region's largest economy and car market.
Chinese automakers are ramping up their efforts to establish more manufacturing and assembly plants in Europe to enhance competitiveness against local rivals, particularly as the demand for cars from China, the world's largest car market, slows down. This expansion also aims to circumvent the EU tariffs placed on China-made EVs.
An interview from earlier this month with Automobilwoche revealed that BYD is exploring the possibility of a third facility to cater to the European market within the next two years, in addition to plants being developed in Hungary and Turkey. While Germany is currently the preferred choice for BYD, internal considerations are underway due to factors such as high labor and energy costs, low productivity, and flexibility. A final decision is pending.
The source, who chose to remain anonymous, disclosed BYD’s interest in establishing a presence in Western Europe to build brand recognition and gain acceptance among European consumers. However, BYD is adhering to a directive from Beijing not to invest in countries that supported the import tariffs, excluding certain EU member countries like Italy and France.
Discussions also highlight the potential closure of certain sites, particularly Volkswagen locations, in response to Chinese officials and automakers' evaluations.
The pivotal decision for BYD in determining the location of its third plant hinges on various factors, including sales performance in Europe, and capacity utilization at existing Hungarian and Turkish plants. The upcoming launch of production in Hungary in October and Turkey in March 2026 will lead to a combined production capacity of 500,000 cars annually.
In addition to electric vehicles, BYD remains committed to hybrid technology. Sales projections from S&P Global Mobility indicate a significant surge in BYD's European sales, from an estimated 186,000 units this year to almost 400,000 units by 2029.
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