On Monday, BYD Company Limited (OTC: BYDDY) signed an agreement to open a $1 billion electric vehicle manufacturing plant in Turkey, posing a direct threat to Tesla Inc’s (NASDAQ: TSLA) dominant position in several European markets.
BYD strengthens its presence in Europe
While BYD has been selling all of its electric vehicles in Europe since 2021, the majority of sales are still in China, but the Tesla killer is aggressively expanding its footprint outside of its home market. This will be its second facility in Europe, with the first currently under construction in Hungary. The facility in Turkey will be located in the province of Manisa, allowing BYD to avoid 40% tariffs in the country. Additionally, Turkey has a customs trade agreement with the European Union, which hit BYD last week with preliminary tariffs on imported Chinese electric vehicles, adding a 17.4% duty to the existing 10% tariff on vehicles not manufactured within the EU.
According to Investor’s Business Daily, BYD’s factory in Turkey will have an annual capacity of 150,000 EVs and will also have a research and development department.
BYD continues to expand its global footprint
Last Thursday, BYD opened its first EV factory in Southeast Asia, or more precisely, in Thailand. The first factory outside of Asia will be in Brazil, as BYD took over the old Ford Motor factory BYD Inc. (NYSE: F) and began converting it into an EV facility earlier this year. In June, Bloomberg reported that BYD is also finalizing talks for a factory in Mexico, which is expected to create about 10,000 jobs. In this regard, BYD is following in Tesla’s footsteps by taking a cue from the Gigafactory playbook.
While Tesla reported a second consecutive decline in deliveries, BYD posted record sales in June and the second quarter. Tesla beat estimates, as the 4% global sales decline was smaller than what Wall Street analysts had expected, but BYD posted record sales in the second quarter of 986,720 EVs, representing a 57% increase. In June alone, BYD reported a 35% year-over-year growth as it sold 341,658 EVs. These robust numbers are a result of affordable pricing, as BYD engaged in a price war in the first quarter that hurt its rivals, including Tesla.
Leaving BYD’s aggressive approach aside, challenges and competitive threats remain.
But even BYD still faces challenges, with many smaller rivals and startups ramping up their efforts. One example is Nio Inc (NYSE: NIO), which last week also reported record sales in June and the second quarter. Last month, Nio unveiled its affordable EV brand, Onvo, and will bring an affordable EV to Europe next year. With Nio, along with other startups, planning to launch more affordable EVs in the coming months, the competitive threat is mounting for both Tesla and BYD, whose margins have been hurt by price wars they both used to boost demand.
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This article is from an unpaid outside contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.
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