Is Turkey Becoming an Electric Vehicle Hub? EU Law & China

1. Europe's Protective Shield and Critical Threshold: 55% Localization Rule

The European Union painfully realized that its giants like Volkswagen, Stellantis, and Renault cannot compete on price against their Chinese rivals (BYD, MG, Chery, etc.). An electric vehicle produced in China can be manufactured 30% cheaper than one produced in Europe. To prevent this unfair competition, the EU Commission imposed additional customs duties of up to 38% on Chinese-origin vehicles. However, the real big move was the tightening of "Rules of Origin."

According to this, for an electric vehicle to be considered "European Made" and sold to EU countries with zero customs duty, at least 55% of the vehicle's total value must be produced in Europe (or in Turkey due to the Customs Union agreement).

This is where the system gets stuck: The Battery Problem.

• 🔋 Approximately 40% of the total production cost of an electric vehicle consists of the battery pack.
• 🏭 More than 75% of the world's electric vehicle batteries are produced in China.
• ⚠️ Result: If you import the battery as a ready-made package from China and install it in the vehicle, even if you produce all other parts (body, tires, glass, seats) in Europe or Turkey, reaching the 55% localization rate is almost mathematically impossible.

2. The Ingenious Plan of Chinese Giants: "Backdoor" Turkey 🇹🇷

Chinese brands know that directly entering the European market is no longer profitable. Even if they try to establish factories in countries like Hungary and Poland, Europe's high labor costs, union barriers, and heavy bureaucracy slow things down. At this point, Turkey emerges as a savior angel (or Trojan Horse).

Thanks to Turkey's Customs Union Agreement with the EU, industrial products manufactured or sufficiently assembled in Turkey can enter Europe with zero customs. Additionally, Turkey's tremendous experience in the automotive supply industry (supply chain), skilled and more cost-effective labor force compared to Europe, and logistical advantages are unmatched opportunities for Chinese giants. BYD's massive $1 billion investment in Manisa is just the first step of this strategy.

How Do They Solve the Math? Here's the Key Strategy:

If importing the entire battery from China disrupts the localization rate, brands apply the following formula:

1. Import the "Chemical Cells" (LFP or NMC cells), the real secret of the battery, from China to Turkey duty-free.
2. Perform the "Battery Pack Assembly" process, where these cells are combined with software and cooling systems are integrated, in the factory in Turkey. This process allows part of the battery's value to be considered "local."
3. Source the vehicle's body sheet, headlights, tires, rims, seats, and glass from Turkey's incredibly strong automotive supply industry (Bosch, Brisa, Şişecam, etc.).
4. Result: The vehicle is considered over 60% Turkish (and thus EU) origin. The vehicle leaving the Turkish factory is shipped and sold in the German and French markets with zero customs, avoiding the 38% additional tax.

Conclusion: Will Turkey Be Just an Assembly Hub or a Technology Giant?

Turkey is currently on the brink of a historic opportunity. If we allow Chinese giants to use our country merely as a "screwdriver factory" (an assembly hub where parts are only put together) just to bypass customs barriers, we may gain employment in the short term but fail to create technological added value in the long term.

However, if we multiply initiatives like the TOGG & Farasis partnership's Siro Battery investment or the Ford-LG-Koç Holding's battery factory project in Ankara, the game changes entirely. If we succeed in attracting not only the package but also the "Cell" production, the heart of the battery, to Turkey, our country will not only be Europe's backdoor but one of the world's largest and indispensable Technology Hubs in electric mobility, autonomous driving, and energy storage. The legal process and incentive policies over the next 2-3 years will determine the fate of the Turkish automotive industry for the next 50 years.