China’s electric vehicle giant BYD is currently considering building a new factory in Germany according to a report by Reuters. The move is part of BYD’s plans to increase its presence in Europe and avoid tariffs that the European Union imposed on car imports from China.
BYD has already started building manufacturing plants in Szeged, Hungary, and Izmir, Turkey, that will produce 500,000 EVs per year combined. The Szeged factory is expected to open by the end of this year, while the facility in Izmir should start production in March 2026.
BYD is facing a slowing demand in its home market and sees expansion to Europe as an opportunity to increase its sales. By having another production facility in the region, the company would be able to offer cheaper EVs and challenge the domestic producers.
BYD’s executive vice president Stella Li hinted that a third factory is in play in an interview earlier this month but didn’t offer any detail about the preferred location. It is believed that the company is eyeing Western Europe, wanting to give its brand more legitimacy by positioning itself in the region with a rich automotive history.
France previously indicated that it would be open to welcoming BYD, but that doesn’t seem to be a legitimate option at the moment. The company was advised by the Chinese government to avoid investing in EU countries that supported the tariffs, with France and Italy being on the list.
While Germany is now at the top of BYD’s list of preferred locations, the decision is yet to be confirmed. Some executives remain wary of the idea due to the country’s high labor and energy costs and what is perceived to be low flexibility.