Turkey’s successful venture into electric vehicle production through the creation of a national auto brand, Togg, a 60-year-old dream of the nation, has brought both collaboration and antagonism with China. This has become a general characteristic of the electric vehicle market.
Togg is the result of a project launched in 2017 involving five major Turkish companies. The car, introduced to the market last year, is Turkish-made but powered by engines fueled by Chinese batteries. In order to access these batteries, in 2023, Togg, together with a Chinese company, Farasis Energy, established the SIRO Battery Development and Production Campus, an investment of $2.5 billion in the city of Gemlik.
It is essentially a battery factory that will employ 2,200 people. Previously, the Turkish government had invited several Chinese electric vehicle battery manufacturers to the country, renewing its call in December last year when a Turkish delegation visited the Asian economic powerhouse. However, in the year of Togg’s launch, Turkey raised import tariffs on Chinese electric vehicles to 50%, tightening other conditions that Chinese manufacturers must meet to enter the Turkish market. The decision coincided with an attempt by BYD, one of China’s largest electric vehicle manufacturers, to reach Turkish customers.
The leaders of the company producing Togg intend to make the business profitable by 2027 and to turn the Turkish brand into a competitor to Chinese cars. This ambition has generated significant interest in the local market and is openly promoted by Turkish President Erdogan wherever he goes or to whoever receives him, including Hungarian Prime Minister Viktor Orban and wealthy Arab sheikhs. A similar situation is unfolding on a larger scale in Europe, where latecomers to the electromobility adventure feel overwhelmed by the forces coming from China.
China’s electric transformation has decades of advancement. Electric cars and other battery-powered vehicles already account for a third of sales there, according to The Wall Street Journal. Beijing is pushing its producers and suppliers beyond borders and encouraging them to export more. Concerns that the world will be flooded with cheap Chinese cars are growing in some regions. Last year, China surpassed Japan and became the largest exporter of cars and parts. Chinese cars are rarely seen in the US, where they are met with an additional 25% import tariff. In February, President Biden asked the Department of Commerce to launch an investigation into foreign car software. The main goal is to stop an invasion of the American market by Chinese cars. Pressure is also mounting in the European Union to raise similar barriers. Among the most vocal are major EU car manufacturers.
And the European Commission is investigating whether cars imported from China are subsidized by the state, which would represent unfair competition. Stellantis has long warned of the Chinese onslaught and has called for action. CEO Carlos Tavares has also come up with a solution to fight the offensive from companies like BYD, Geely, and SAIC: a “reindustrialization” of Europe by bringing back lost production capacity.
This would reduce costs, making European cars more competitive. Tavares also wants a different foreign trade policy. Renault’s chief, Luca de Meo, said that European car manufacturers and raw material and energy suppliers must collaborate more for the European electric car sector to measure up to China’s. Meanwhile, EU manufacturers have embarked on a race to reduce costs so they can deliver electric cars at prices comparable to those of Chinese companies, Reuters reports.
Stellantis and Mercedes have raised nearly €4.4 billion to build three electric battery factories in the Union in the next few years. This plan would require a total of €7 billion, Euronews notes. The factories are expected to be built in Germany, Italy, and France. Among the funders are BNP Paribas, ING, Deutsche Bank, Intesa Sanpaolo, and the governments of the three states. Europe is still in its infancy in battery production for electric cars, with Hungary, Poland, and Germany being forces in this field.
In ten years, Europe could have 34 more battery factories than it does now. China will have 160 more gigafactories. If Europeans only talk about European alliances in the face of the Chinese flood, other auto powers are actually allying themselves. Honda and Nissan, once ruthless rivals, have joined forces to survive the electric car race. They will develop vehicles together. The Chinese are not intimidated by such moves. Some manufacturers are building factories in the heart of the European Union, possibly to bypass trade barriers and sell in mature markets.
To build a factory in Hungary, BYD will receive a non-repayable loan from the Budapest government. And Poland seems to be getting a new electric car factory, but not from the national brand dreamed of by the previous government, but from Stellantis, which has allied with… the Chinese company Leapmotor. The news comes from Reuters, citing sources close to the situation. Stellantis also plans to build a battery factory in Europe with the help of the Chinese giant CATL. Chinese companies are also building factories in Mexico, possibly to avoid tariffs. For now, China seems unbeatable in the electric car race.
And, as a map drawn up for Nissan executives shows, “80% of the global market has an environment that would accept Chinese electric cars,” as observed by a director of the Japanese company. That is why Nissan, like other Western manufacturers such as Ford and Tesla, wants to export electric cars produced in China. Nissan plans to do this starting in 2025.