Chinese electric vehicle manufacturer BYD is exploring the establishment of a third assembly plant in Europe, with Germany as a potential location. This move aims to bolster its European market presence, circumvent EU import tariffs, and address challenges such as high operational costs.
In a necessary manoeuvre to solidify its foothold in the European electric vehicle (EV) market, China’s BYD is said to be contemplating the establishment of a third assembly plant on the continent. Germany, Europe’s largest economy and automotive hub, has emerged as a prime candidate for this venture.
The initiative falls in line with BYD’s broader objective to enhance its presence in Europe, especially as domestic demand in China shows signs of deceleration. By establishing local manufacturing capabilities, BYD aims to mitigate the impact of the European Union’s import tariffs on China-produced EVs, which were imposed last year.
”BYD’s interest in Western Europe stems from a desire to cultivate brand recognition and gain acceptance among European consumers as a local manufacturer. However, the company remains cautious…”
The company’s executive vice-president, Stella Li, indicated earlier this month that BYD is considering a third facility to serve the European market in the next two years, supplementing the ongoing projects in Hungary and Turkey. However, she refrained from specifying potential locations.
According to a source familiar with the matter, Germany has surfaced as the leading contender for this new plant. Nonetheless, internal deliberations are ongoing, given concerns about Germany’s elevated labour and energy expenses, coupled with issues related to productivity and operational flexibility. No definitive decision has been reached.
BYD’s latest portential move an extension of its growing European ambitions
BYD’s interest in Western Europe stems from a desire to cultivate brand recognition and gain acceptance among European consumers as a local manufacturer. However, the company remains cautious, adhering to directives from Beijing to avoid investing in countries that supported the EU’s import tariffs.
Consequently, nations like Italy and France are currently less favoured in BYD’s expansion considerations.
In January, reports emerged that Chinese officials and automakers, including BYD, were evaluating certain German factories anticipated to close, particularly those belonging to Volkswagen.
The political landscape in Germany also plays a role in BYD’s deliberations. The Christian Democratic party, poised to lead in the forthcoming government, has pledged to reduce corporate taxes and attract skilled labour, with a keen interest in bolstering the automotive sector, a significant contributor to the nation’s revenue. However, the party opposes state subsidies, a strategy frequently employed by the current administration, notably exemplified by the nearly €10 billion ($10.9 billion) allocated for an Intel site, which has since faced delays.
Read more China production stories
- Honda cuts China ICE production by 50% as EVs gain momentum
- BYD – Aiming for the top
- Battery prices break ICE cost barrier opening up major EV potential
- The urgency for enhanced Design For Manufacture (DFM) in vehicle production
The extent to which individual countries adopt “pro-China” stances in the coming years will be pivotal in BYD’s final decision-making process. Additionally, the company’s sales performance in Europe and the capacity utilisation rates at the Hungarian and Turkish plants will influence the timing and location of the third facility. BYD’s Hungarian plant is slated to commence production in October, with the Turkish facility expected to be operational by March 2026. Collectively, these plants aim to achieve an annual production capacity of 500,000 vehicles.
The company’s European sales trajectory appears promising. Estimates from S&P Global Mobility project that BYD’s sales in Europe will more than double this year to 186,000 units, up from 83,000 units in 2024, with expectations to approach 400,000 units by 2029. In 2025, BYD’s Atto 3 emerged as the top-selling model in Europe, recording 13,655 sales. It was followed by the Seal U with 11,678 units, the Dolphin with 11,437 units, and the Seal with 10,578 units.
In a December interview with the German magazine Capital, Stella Li revealed that the initial models to be produced in Hungary would be the Dolphin and Atto 3. She also hinted that the Atto 2 small crossover and the Seagull minicar, set to launch in Europe in April, could be subsequent models manufactured in the region.
No comments yet