BYD eyes third European plant amid tariff challenges

The Chinese EV giant is considering expanding local production to avoid higher import tariffs.

Mar 10, 2025 - 01:24

BYD eyes third European plant amid tariff challenges

BYD, the world's largest electric vehicle manufacturer, is weighing the possibility of building a third factory in Europe. The company, which already has production sites underway in Hungary and Turkey, aims to solidify its foothold in the region as tariffs on Chinese-made EVs complicate its entry into the market.

Navigating tariffs with local production

The European Union imposed additional tariffs on Chinese electric vehicle imports last year, prompting major Chinese automakers to rethink their strategies. While BYD remains China’s top contender in the European market—outselling SAIC Motor’s MG by 44% in January—it faces increasing pressure to localize production to maintain competitiveness.

BYD cars parked in the BYD store in Budapester Strasse
Photo by Jens Kalaene/picture alliance via Getty Images

Speaking to reporters in Frankfurt, BYD Executive Vice President Stella Li said that a decision on a potential third European plant could come within the next 18 to 24 months. The company is also exploring plans to establish EV battery production in Europe, though details regarding the location and timeline for the venture remain uncertain.

A growing presence in Europe

BYD's European expansion is already well underway. The automaker is set to begin production later this year at its Hungary-based facility, while a second site in Turkey is in the works. Once operational, these two factories will have a combined capacity of 500,000 vehicles per year, helping the company bypass costly import tariffs and establish a stronger presence in one of the world’s most lucrative EV markets.

Despite an overall slowdown in demand for EVs, Europe remains an attractive market for Chinese automakers due to the higher price points vehicles can command compared to China’s fiercely competitive domestic market. However, as tariffs continue to shape the landscape, establishing local manufacturing capabilities has become a necessity rather than an option for companies like BYD.

Speculation and strategy

While BYD’s leadership has expressed interest in further European expansion, a company spokesperson clarified that discussions regarding a third plant remain speculative at this stage. The spokesperson emphasized that such a move would be a long-term consideration, with no specific locations confirmed for now.

A global strategy for expansion

BYD’s European ambitions are just one piece of its aggressive global expansion strategy. The automaker has been rapidly establishing production hubs across multiple continents, including Southeast Asia, South America, and North America.

The exterior of a BYD Co. electric vehicle showroom, operated by Schiller Auto, in Budapest, Hungary, on Monday, May 27, 2024.
Bloomberg/Getty Images

BYD's newest facility in Indonesia, which will open by the end of the year, will bolster production capacity by an additional 150,000 vehicles annually. This move not only strengthens BYD’s foothold in one of the world’s fastest-growing EV markets but also grants the company favorable trade conditions, including tax exemptions for imported cars.

Final thoughts

As Chinese EV makers continue to navigate Europe’s regulatory and economic landscape, BYD’s next move could serve as a bellwether for how foreign manufacturers adapt to protectionist trade measures.

Whether or not the company proceeds with a third factory, its current investments indicate a clear commitment to growing its European market share through localized production. With tariffs reshaping global EV trade, the question is not whether Chinese automakers will build factories in Europe — but how quickly they can do it to stay competitive.

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