BYD is leaning on overseas growth to offset a local plunge, making the high-margin European market an unusually high priority. By Stewart Burnett
BYD is going to need three local assembly plants and one battery factory in Europe over the longer term to hit its volume targets while complying with EU rules, Special Adviser for Europe, Alfredo Altavilla, said in Turin on 17 September. The automaker is about to start mass production at its first European plant in Hungary and expects to lock in a second site by the year’s end, preferring to refurbish a brownfield site over a new build, with Spain and France now the leading candidates.
The push is a direct response to tariff pressure. As it stands, BYD faces a combined 27% tariff on Chinese-made electric vehicles (EVs) entering the EU. Local rules appear set to become appreciably more stringent in the near future: the draft Industrial Accelerator Act, similar to the North American USMCA, would set a local-content threshold of roughly 70% for subsidy and procurement eligibility.
This figure is still under negotiation, but is likely to pass in some form. For Chinese automakers still heavily dependent on imports into Europe, it strengthens the case for building both vehicles and batteries inside the bloc regardless of how that specific threshold lands.
BYD’s Hungarian plant in Szeged began trial production in January with 960 employees, and management now expects vehicle assembly to begin in either November or December. The automaker is targeting an eventual capacity of 200,000 units a year, although output will run well below that for at least two years.
Unfortunately the project is now being met with political pressure: Hungary’s new government under Prime Minister Péter Magyar is reviewing investment and subsidy agreements signed with Chinese companies under his predecessor, has tightened environmental enforcement at the site, and a police investigation into the removal of contaminated soil from the construction site remains open, although BYD maintains it has complied with all local rules.
BYD’s Hungary plant will ramp to mass production by the year’s end
A separate Turkish plant, announced in 2024 as a US$1bn facility in Manisa with 150,000 units of annual capacity, remains on hold, with construction never having begun and no timeline set for it to commence. That marks a reversal from Altavilla’s own comments a year earlier, when he told Reuters the Turkish plant would come online by March 2026, and that Hungary and Turkey combined would provide 500,000 units of annual capacity.
BYD’s newfound hesitation with Turkey appears to reflect ongoing concern that vehicles built outside the EU proper—even inside Turkey’s customs union with the bloc—could fall foul of the same “Made in Europe” local-content rules driving BYD’s continental strategy in the first place.
BYD is also showing an active interest in acquiring a brownfield site from a local automaker, and live talks remain underway with Stellantis and others to take over their underutilised facilities. Original reporting indicated a Stellantis plant in Italy was the more likely option but this has since shifted towards France and Spain. Altavilla now describes Italy as “a plan B” rather than a serious contender for the second plant specifically: “I would like to find them in Italy but I haven’t,” he said, referring to competitive site conditions.
Any such acquisition will not take the form of a joint venture, the structure compatriot automaker Geely has favoured elsewhere, including its manufacturing arrangements with both Renault and Ford. Executive Vice President Stella Li has said a joint venture “would not work for the company”, a position also consistent with BYD’s stance on potential manufacturing in Canada.
BYD’s commercial vehicle lineup could soon be exposed to the same tariff pressure, and this appears to be reflected in the automaker’s local strategy. It unveiled the ETT 44 electric tractor at IAA 2026, targeting customer deliveries from the second quarter of 2027, with Li pledging that “we will produce everything we sell in Europe here locally”. The commitment directly pre-empts pressure from European truckmakers including Volvo and Traton’s MAN brand, who have lobbied Brussels to extend anti-subsidy duties to Chinese electric trucks on the same terms already applied to passenger EVs.
The EU is also reportedly requesting that China voluntarily limits its hybrid exports into Europe or face tariffs on those too. However, the Hungary plant has been designed to accommodate both battery-electric and hybrid production—a seemingly proactive measure against the prospect of the bloc expanding its tariff rules beyond EVs alone.
BYD’s European manufacturing build-out is a reflection of an apparent tipping point in the automaker’s revenue: overseas exceeded domestic for the first time during H1 2026. This is in part due to a local sales backslide, with China sales falling 32.7% through August in what Chairman Wang Chuanfu characterised as the “knockout stage” of the Chinese market’s fierce price war. This combined with tariffs means that European production is an unusually high priority for BYD.