Turkish President Recep Tayyip Erdogan posing during the official opening ceremony of the factory producing the country's first nationally developed electric car, the TOGG, produced by Turkey's Automobile Joint Venture Group at the Gemlik Campus, in Bursa on Oct. 29, 2022. (Turkish Presidency Press Office/AFP)
Turkey, the transcontinental country with a budding automobile industry, has imposed a 40 percent tariff on electric vehicle imports from China.
Turkish President Tayyip Erdogan had decided to impose the tariff on China, but not specifically on electric cars made in other countries, according to the country’s official announcement on March 3.
Sun Kai (a pseudonym), manager of a car store in Shanghai, confirmed with The Epoch Times on March 6 that Turkey didn’t impose a similar tariff on Tesla and Toyota, but only Chinese-made brands.
Turkey may be following the U.S.’s lead (27.5 percent) in imposing a high tariff on Chinese vehicles so to prevent low-price dumping while protecting its burgeoning electric vehicle industry and the European market, speculated Sun, citing the significance as Turkey is a critical trade hub straddling Europe and Asia.
Localization of Electric Vehicles
Erdogan has been striving to promote domestic electric-driven car production over the years as part of his campaign for the upcoming presidential election in June.
Erdogan’s public commitment includes a nationwide charging infrastructure for electric vehicles, as well as incentives such as tax breaks, free land, low borrowing costs, and a guarantee of government procurement of 30,000 electric vehicles per year after 2035.
Earlier in November 2017, he led the establishment of Turkey’s first domestic car brand TOGG, forged by a joint venture with Anadolu Group, BMC Turkey, Kök Group, Turkcell, and Zorlu Holding as co-shareholders.
Turkey's Minister for Labor and Social Security Vedat Bilgin stands by Turkey's domestic car TOGG at the Congresium ATO in Ankara International Convention & Exhibition Center in Ankara, on March 31, 2022. (Adem Altan/AFP via Getty Images)
TOGG said in 2020 that it would invest 22 billion Turkish liras ($2.4 billion) over 13 years in its vehicle production and expects to produce 175,000 electric vehicles per year. The company has also signed with Chinese lithium battery manufacturer Farasis for lithium batteries for its vehicles, while battery modules and packs will be jointly developed and produced with Turkey, reported Reuters on Oct.20, 2020.
Turkish Industry Minister Mustafa Varank said in January that TOGG aims to export abroad within the next two years, and the market launch in Turkey is scheduled for March.
TOGG still relies on imports of components such as batteries, engines, and some electrical systems, although it is locally designed and assembled. Valank said that in October last year, 51 percent of materials for TOGG production could be sourced from the country and then rise to 65 percent by 2025.
Late last year, TOGG defined an annual production target of 20,000 C-SUVs (sport utility vehicles) in 2023. The factory has raised its production capacity from initially 100,000 units to 175,000 units.
Turkish Electric Vehicle Market Outlook
According to market statistics, Turkey’s electric vehicle sales were over 7,000 in 2022, double that of 2021.
The potential of the consumer market is reflected in the good demographic dividend of Turkey. According to the Turkish Statistical Institute, Turkey’s total population will be 85.27 million by the end of 2022, an increase of nearly 600,000 compared to 2021, with an annual growth rate of 7.1 per thousand.
The demographics also show that the Turkish labor force is dominated by young adults younger than in other European countries.
The Turkish electric vehicle TOGG is displayed during the Consumer Electronics Show in Las Vegas, Nev., on Jan. 6, 2022. (Patrick T. Fallon/AFP via Getty Images)
Turkey focuses on Europe as its critical overseas automotive market due to a customs union trade agreement between the European Union and Turkey. In addition, Turkey is following the European carbon reduction program and is expected to become a center for electric vehicle production.
Turkey’s emerging auto market has even caught the attention of BYD, a Chinese electric vehicle manufacturer giant, which made a deal with Turkish distributor ALJ Turkiye to sell its passenger cars and light commercial vehicles in Turkey.
High Tax Barriers to Low-Cost Chinese Autos
With its price advantages, China is probably Turkey’s biggest competitor in the European electric vehicles market, and it’s producing most of the auto batteries in the world.
Patrick Koller, CEO of Forvia, the world’s seventh-largest auto parts manufacturer, said at the Consumer Electronics Show (CES) conference in Las Vegas in early January that the cost of producing electric cars for Chinese automakers is 10,000 euros (about $10,700) lower than for European automakers. Those costs are mainly in R&D, capital expenditure, and labor costs.
Such a low-cost dumping style strategy in the global electric auto market, employed by the Chinese communist regime, includes subsidies, purchase tax exemptions, and restrictions on foreign-made vehicles and lithium batteries supply. This tactic has enabled Chinese electric vehicle manufacturers to capture markets in several countries, making foreign car companies (including TOGG) dependent on Chinese-made lithium batteries.
The 10 percent tariff that Europe imposes on Chinese electric vehicles is equivalent to welcoming large numbers of Chinese electric cars into Europe, which could also undermine Turkey’s European market.
Mr. Huang, an auto mechanic in Taiwan who gave only his surname security concerns, spoke to The Epoch Times on March 5, saying that the Chinese Communist Party spared no money to pour cheap Chinese electric cars abroad.
That triggered Turkey’s tariff barriers to protect domestic enterprises, “the higher the tariff, the greater the government’s [Turkey’s] protection,” Huang said.
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