Chinese car manufacturer BYD increases car production in Europe to avoid import taxes

BYD has announced plans to produce the majority of electric vehicles sold in Europe on the continent, while strongly opposing the EU's tax increase. "Frustrated" with EU tax policies, the Chinese car manufacturer will ramp up production in Europe to avoid taxes.

Additionally, BYD stated that it will not simply accept increased costs without a fight.

BYD plans to shift electric vehicle production to Europe to cope with taxes (Photo illustration: Reuters).

The Chinese car brand is facing an additional tax rate of 17% in addition to the current 10% applied to vehicles manufactured in China and exported to Europe.

However, speaking at the Paris Motor Show 2024 in France, BYD's vice president Stella Li stated that the brand will produce many components in Europe, assemble battery packs at factories in Hungary and Turkey, and only import battery cells from China.

In an interview with Reuters, Li stated that the majority of BYD electric vehicles sold in Europe in the future will be assembled in Hungary. Furthermore, the company will intensify the purchase of components from European suppliers as much as possible, as well as from Chinese suppliers with factories in Europe.

According to Li, BYD will consider whether to pass on the tax costs to customers or absorb them. She also added that, due to the higher taxes, the company does not expect to sell cars in Europe for less than 30,000 euros (about 816 million Vietnamese dong).

"We do not agree with many calculations. That is not a fair ruling. Politicians should avoid using tax tools, adding costs to car manufacturing operations, and disrupting the automotive industry," she said.

As part of BYD's strategy in Europe, the Chinese car manufacturer will change its business operations in Germany after an unsuccessful debut in the country. Last year, BYD sold over 4,000 cars in Germany, but sales dropped to less than 1,500 cars in the first 6 months of this year.

Li explained that this was because BYD did not build the necessary infrastructure in the right direction, and in August, it decided to acquire the German distributor, Hedin Electric Mobility, to better control vehicle sales in that market.

"You will soon see changes; you will see many BYD vehicles on the roads in Germany," Li said. BYD clearly has high expectations for the German market.