A tariff free route runs through a factory, not a port
A car assembled inside Turkey can cross into the European Union with no tariff, the tax a government charges on a good coming from another country. That is because of a customs union between Turkey and the European Union, an agreement letting most goods move between the 2 without one. About 85% of every vehicle Turkey exports already moves through that route, according to the European Council on Foreign Relations. That single rule is why BYD, the Chinese automaker, pledged 1 billion dollars to build a car plant in Manisa, Turkey, rather than keep shipping finished cars in from home.
Turkey taxes the cars shipped straight from China
Turkey has separately taxed electric cars shipped in directly from China at an additional 40% since March 3, 2023, according to Global Trade Alert, a project that tracks government trade actions against official notices. In September 2025, Turkey replaced that flat rate with a new formula, a 30% surcharge or a minimum of 8,500 dollars a vehicle, whichever charge is higher, according to Turkiye Today, which states the charge for electric cars specifically. The tax works. Chinese brands held only 10% of electric vehicle sales inside Turkey in 2024, against 60% in Morocco and 80% in Egypt and Jordan, 3 countries with their own tariff free routes into Europe and no matching duty.
Show the numbers
| Turkey | 10 |
| Morocco | 60 |
| Egypt and Jordan | 80 |
BYD bet 1 billion dollars on a Turkey factory, then paused it
BYD agreed to the Manisa investment in July 2024, promising a factory able to build 150,000 cars a year and employ around 5,000 people, on 1.6 million square metres of land. Tax incentives offered by Turkey were expected to add 500 million to 1 billion dollars in extra profit for the company. By June 2026, Turkey had suspended the access BYD had to those incentives, and the company had paused construction. Stella Li, executive vice president at BYD, told Reuters why.
Hungary is the number one priority right now.
Stella Li, executive vice president at BYD. Source 4.
BYD car sales inside Turkey fell 73.3% in the first half of 2026 against the first half of 2025, down to 6,809 vehicles from 25,501, according to Turkiye Today. If BYD formally abandons the project, the Ministry of Industry and Technology in Turkey has said it will recover the customs duties already waived, with interest, and reclaim the land.
The second half 2025 figure, 20,036, is calculated by MAOWCE, the difference between the full year 2025 total in source 5, 45,537, and the first half 2025 total in source 5, 25,501. Source 5 does not state a second half 2025 figure directly.
Show the numbers
| First half 2025 | 25,501 |
| Second half 2025 | 20,036 |
| First half 2026 | 6,809 |
A trade panel ruled the tax illegal
China took the dispute to the World Trade Organization, the body that referees trade disagreements between countries, on October 8, 2024. A panel ruled on July 28, 2026 that the duty structure Turkey used against Chinese electric cars broke global trade rules, exceeding tariff limits Turkey had already agreed to, and that a Turkish import permit system requiring extra after sales service unfairly disadvantaged Chinese cars against Turkish made ones. None of the sources say whether the ruling also covers the replacement charge Turkey introduced in September 2025.