Turkey has halted import tax exemptions granted to BYD and warned the Chinese electric vehicle manufacturer it may have to repay the benefits if it does not carry out its planned $1bn investment in the country.
An official at Turkey’s Industry and Technology Ministry, which is responsible for overseeing the project, said the incentives were stopped at the start of 2026 because the investment had stalled.
“As there has been no progress for some time, we suspended since the beginning of 2026 the incentives the company had been using,” an official from the ministry was quoted by Nikkei Asia as saying.
“The investment agreement with the company, its conditions, obligations and guarantees are still valid", the official said, adding that “if the investment is not completed, companies are obliged to pay back the incentives, based on the legal arrangements and commitments they have made."
Just Auto has contacted BYD for a comment.
The removal of the tax break appears to have coincided with a steep decline in the company’s sales in Turkey.
BYD sold 152 vehicles in May, compared with 3,866 in January.
Last year, the carmaker sold 45,537 vehicles in the market, more than five times the 2024 total.
BYD signed an agreement with the ministry in July 2024 to establish a research and development centre and a manufacturing plant with annual capacity for 150,000 electric and plug-in hybrid vehicles.
At the time, Turkish authorities said the Manisa facility in western Turkey would begin operating by the end of 2026 and create 5,000 jobs.
The project would have made BYD the first new foreign automotive marque to commit to production in Turkey since 1997.
BYD said at the time that the investment would help it "reach consumers in Europe by meeting the growing demand for new energy vehicles in the region," with Turkey able to send industrial goods into the European Union without tariffs despite not being a member of the bloc.
In exchange for the commitment, Ankara introduced the import tax exemption and also waived a requirement for BYD’s distributor to establish 20 maintenance and repair centres across the country, a rule applied to other carmakers.
However, nearly two years later, construction of the Manisa factory has still not started, raising concerns within the government and drawing attention from opposition parties.
BYD executive vice president Stella Li said on Tuesday that the company’s main focus is its Hungary plant, where production is due to begin in the fourth quarter of this year.
"The second priority will be to focus on finding a second production facility in Europe," she said, adding that the Turkey project is on hold without providing a timeline.
Turkey has also held discussions with Chinese carmaker Chery over a possible manufacturing site, but two officials with direct knowledge of the talks said there has been no progress there either.
