Two years ago, a sprawling 1.6 million-square-meter plot of land in Turkey’s Manisa province was positioned to become the cornerstone of Ankara’s ambition to turn the country into one of Europe’s leading electric vehicle manufacturing hubs. Today, that same site remains untouched, overgrown with wild grass and untouched by construction crews. What was once hailed as a transformative deal between the Turkish government and Chinese EV giant BYD has collapsed into a high-stakes diplomatic and economic standoff, raising questions about Sino-Turkish relations, Chinese investment strategy in Europe, and Turkey’s aspirations for a slice of the global EV supply chain.
In July 2024, Turkish President Recep Tayyip Erdogan took to the global stage to announce Ankara’s landmark achievement: securing a $1 billion investment from BYD, the world’s largest producer of electric vehicles. Under the terms of the agreement, BYD pledged to build a state-of-the-art production facility capable of rolling out 150,000 electric and plug-in hybrid vehicles annually, alongside a dedicated research and development center focused on advancing sustainable mobility technologies. The project was targeted to begin full production by the end of 2026, with projections that it would create up to 5,000 direct local jobs. Turkish officials celebrated the deal as a major win, cementing the country’s position as a competitive manufacturing base for global automotive players.
Just months later, however, those plans have been put on indefinite hold. In a recent interview with Reuters, Stella Li, BYD’s executive vice president, confirmed that the company has paused all preparatory work on the Manisa plant, and is refocusing its European expansion priorities. “Hungary is the number one priority right now,” Li stated, adding that the company’s next focus will be scouting locations for a second European facility – with Turkey currently off the immediate agenda.
The shift in BYD’s plans has dealt a major blow to the Turkish government, which moved aggressively to court the EV maker long before breaking ground on the project. To entice BYD to choose Turkey over competing European locations, Ankara granted the company generous, upfront tax breaks on all its domestic vehicle sales, even before construction commenced. Those incentives paid off quickly for BYD: combined with a new aggressive market entry strategy, the company’s Turkish sales skyrocketed to more than 45,000 units in 2025. Independent experts estimate that BYD has already pocketed between $500 million and $1 billion in extra profits from the Turkish market as a direct result of the preferential tax treatment.
Ankara has responded with threats of retaliation. In February, Turkish Industry Minister Fatih Kacir announced that the government could impose sanctions and heavy monetary fines on BYD for violating the terms of the original investment agreement. While Turkish media reports have suggested penalties could reach as high as $1 billion, sources close to the Turkish government familiar with the negotiations tell Middle East Eye that this figure is widely seen as unrealistic in Ankara. Even if maximum fines are imposed, experts add, the penalties are unlikely to recoup all of the lost tax revenue that Ankara has forfeited to date, though any fine would still represent a substantial penalty for the company.
To understand how the deal unraveled, it is necessary to look back at the longstanding structural tensions that undermined the project from its earliest days. Even immediately after the agreement was signed between BYD and Ankara, China’s Ministry of Commerce issued a quiet directive to more than a dozen major Chinese domestic automakers: cutting-edge electric vehicle technology should remain based in China. The directive specifically named Turkey and India as high-risk markets, requiring any Chinese carmaker planning investment in the two countries to first seek approval from China’s Ministry of Industry and Information Technology, the regulator that oversees the country’s EV sector, as well as the Chinese embassy in Ankara. Sources in Ankara say that order immediately drained momentum from BYD’s investment plans.
China’s longstanding caution about deep investment in Turkey stems from two persistent bilateral disputes that have shaped relations for decades. First, Chinese officials have never forgotten Ankara’s 2015 last-minute cancellation of a $3.4 billion deal to purchase Chinese air defense systems, a move that came after intense diplomatic pressure from the United States. Beijing continues to cite the episode as proof that Turkey is an unreliable strategic partner.
Second, the status of the Uyghur population has long been a thorn in the side of Sino-Turkish relations. Uyghurs are an ethnically Turkic group, with an estimated 12 million living in China’s Xinjiang region, and many in Turkey view them as cultural kin. While the Turkish government has largely avoided public criticism of China’s policies in Xinjiang – even as international human rights organizations characterize Beijing’s actions as genocide – Beijing has still pushed Ankara for greater concessions on the issue.
Many analysts initially believed the BYD deal had been unlocked after Turkish Foreign Minister Hakan Fidan’s high-profile visit to Xinjiang in June 2024, a trip that fulfilled a years-long Chinese goal of showcasing what it frames as normal, stable life for Uyghurs in the region. But sources now indicate that Beijing’s demands went much further: among unmet requirements was the deportation of Uyghur political leaders who have sought refuge in Turkey, a step that would cross a hard domestic political red line for any Turkish government, carrying enormous political cost.
Beyond bilateral tensions, shifting European trade policy further undermined the appeal of a Turkish manufacturing base for BYD. Last year, the European Union began drafting new “Made in Europe” legislation that would exclude vehicles produced in Turkey from large public procurement contracts across the bloc. That directly threatens one of Turkey’s core competitive advantages for automotive manufacturing: its decades-old customs union with the EU, which allows tariff-free access to the single market for goods produced in Turkey.
Multiple senior European officials confirmed to Middle East Eye last year that the bloc’s explicit goal is to restrict access to the European market for Chinese-made EVs assembled in Turkey by Chinese firms. “No doubt, we will take absolutely necessary steps and produce regulation to force China not to use Turkey as only an assembly line but actually develop and produce components,” one senior European official explained. Turkish political lobbyists working on the file say this EU pressure was a major factor pushing BYD to reconsider the investment. A longstanding observer of Sino-Turkish relations added that BYD can instead manufacture vehicles in Hungary – which holds full EU membership – and export them to Turkey without facing steep tariffs, thanks to Turkey’s existing customs arrangements with the EU. That makes a Hungarian base far more commercially advantageous than a Turkish one for accessing both the EU and Turkish markets.
In a final blow to the deal, Beijing demanded additional sweeping concessions from Ankara to move the project forward. In April, Jin Xin, vice minister for foreign affairs of the Communist Party of China Central Committee, held talks with Turkish officials where he raised Beijing’s concerns about Turkey’s volatile economic conditions. According to a source familiar with the discussion, Jin requested additional measures to shield Chinese companies from the impact of Turkish foreign exchange fluctuations, and called for even more extensive tax breaks for BYD beyond the incentives already granted. He also pushed Ankara to speed up and simplify work visa processes for Chinese workers and executives that would be based in Turkey for the project.
Jin also told Turkish officials that Beijing was pressuring BYD to move forward with the Manisa plant, but claimed the government’s ability to force the private firm to comply was limited. That argument found little purchase in Ankara, with insiders dismissing it as a hollow gesture. “They basically tossed us aside,” one Turkish official involved in the talks told MEE.
Today, the empty Manisa site stands as a visible reminder of the risks global carmakers and host governments face as the global EV industry reshapes supply chains, and as great power competition reshapes trade and investment patterns across Europe and the Middle East.
