The factory promise, the market reality

Automotive is no longer just about engines, bodywork, and assembly lines. With electric vehicles, the sector has transformed into a much more complex field where batteries, software, data, supply chains, energy infrastructure, and government incentives are intertwined. This is why a brand's decision to invest in a country cannot be explained solely by the question, "Will they build a factory or not?" Behind it lie customs duties, incentives, market size, currency risk, political relations, access to Europe, and global competition strategies.

The debate surrounding BYD's planned investment in Turkey is significant for this very reason. The issue is not just whether a Chinese brand builds a factory in Turkey; it is about what kind of industrial policy Turkey will pursue in the electric vehicle transition. According to reports in the press, BYD signed an investment agreement with Turkey worth approximately 1 billion dollars in 2024; it was expected to establish a facility in Manisa with an annual capacity of 150,000 vehicles and begin production by the end of 2026. However, it is stated that the company has suspended the factory investment for an indefinite period.

Let us be clearer: There is not just a postponed factory promise at stake; there is a serious question mark regarding public revenue. According to calculations by industry representatives, the tax advantage enjoyed on imported vehicles thanks to BYD's investment commitment may have had an impact in the range of 7,500–11,000 dollars per vehicle. In total, a risk of tax loss approaching approximately 500 million dollars, which exceeds 16 billion TL at current exchange rates, is being discussed. Although this figure is not an officially finalized loss item, it is serious enough to ask this question: With no concrete progress on the factory site, on what guarantee was a commercial advantage of this magnitude provided?

On paper, the approach might seem correct. Because in the era of electric vehicles, it would be a huge mistake for Turkey to become merely an import market. Whether Chinese, European, or American, every manufacturer that will sell vehicles in Turkey must also bring technology, employment, sub-industry, and export capacity to the country. The problem starts right here: If you are providing incentives, you must receive the return in a clear, measurable, and phased manner.

An investment commitment should not remain a declaration of good intent. If land allocation, import facilitation, tax advantages, or quota opportunities are provided, each must be tied to concrete milestones. Large-scale commercial advantages should not be opened until the foundation of the factory is laid, construction is completed to a certain percentage, machinery orders are placed, local supplier contracts are signed, and employment commitments are realized. Otherwise, a company enters the market with an investment promise, uses the advantage, makes its sales; then it can change its global strategy and turn to another country.

At this point, it is easy but incomplete to say "BYD deceived us." Companies do not act emotionally; they calculate costs, risks, and returns. Turkey has strong sides for investment: proximity to Europe, Customs Union experience, an advanced automotive sub-industry, an experienced workforce, and a large domestic market. However, the difficulties are also evident. Inflation is still high, financing costs are heavy, currency expectations are uncertain, domestic demand is under pressure, and the problem of predictability for investors persists. According to the latest Reuters data, annual inflation in Turkey is 32.61 percent in May 2026; the Central Bank policy rate is at the 37 percent level. The IMF also lowered its 2026 growth forecast to 3.4 percent due to weaker activity and energy prices.

Without seeing this picture, it is not enough to just ask "why didn't they build a factory?" An automotive factory is not an investment built overnight. It requires land, infrastructure, energy, logistics, a supplier network, human resources, and financing. In electric vehicles, a battery ecosystem, software capability, and charging infrastructure are added to this. In a high-interest environment, the return on investment period lengthens; as currency and cost uncertainty increases, the investor's decision may be postponed. This does not eliminate BYD's responsibility; however, it shows that Turkey needs to set up its negotiating table more firmly.

The Togg example is also important in this debate. In public opinion, comparisons are frequently made such as "so much investment was made in Togg, so much advantage was provided to BYD." However, this comparison must be made carefully. A total investment plan of 22 billion TL spread over 15 years was mentioned for Togg; it was announced that the investment size would reach higher levels in Euro terms in later periods. It was also stated in public resources that the Gemlik facility was established with a target of 175,000 vehicles annual capacity.

Still, it would not be correct to put Togg and BYD in the same category. Togg is Turkey's initiative to create its own brand; BYD is part of a global manufacturer's strategy for access to the Turkish market and the European periphery. One is a symbolic and strategic project in terms of national industrial policy, the other is foreign capital investment. Therefore, support mechanisms cannot be established with the same logic. Supporting a domestic brand is one issue, opening a market advantage to a foreign investor is another.

The real issue is that Turkey needs a clear and disciplined game plan in the electric vehicle transition. Will Turkey be just a market where cars are sold, or will it be a center for batteries, software, components, engineering, and exports? If the goal is the latter, investment incentives must go beyond the call of "come and build a factory." Local supply ratio, technology transfer, R&D center, engineering employment, battery ecosystem, and export commitment must be at the center of the contract.

What needs to be done from now on is not to scare away foreign investors, but to clarify the rules. Turkey does not have the luxury of closing the door to Chinese, European, or any other manufacturer. As electric vehicle competition intensifies, it must attract technology and capital. But this power of attraction must be built not on concessions, but on mutual obligations. If a tax advantage is to be given, concrete investment progress must be sought in return; if the commitment is delayed, the advantage should be suspended, and if the investment does not materialize, a sanction mechanism to compensate for the public loss must be clear.

Because the reality of the new era in automotive is this: Countries are now competing not only with vehicle manufacturers but also with the state policies behind them. China is advancing in electric vehicles with scale, low cost, and strong state support. Europe is increasing protectionist measures. The US is shaping its own market with strategic industrial policies. Turkey, on the other hand, should not remain either a pure importer or just an assembly base in this game.

The BYD debate is therefore more than a disappointment. It shows that Turkey needs to move to a smarter, more measurable, and accountable model in investment incentives. The issue is not to get angry saying "the Chinese deceived us"; it is that whoever comes next, Turkey must sit at the table stronger.

A factory promise is nice. But in industry, it is not words, but the production line that works. A tax advantage is valuable; if it does not return to the public good, it turns into a privilege that only makes imports cheaper. Turkey's need starts right here: an automotive industrial policy that is free from emotional reactions, calculated, open to investors, but strictly protects the public interest.