CHINESE CARMAKER TO AVOID PAYING TARIFFS ON ELECTRIC CAR EXPORTS TO BRITAIN

Chinese giant BYD will avoid paying tariffs on electric cars exported to Britain after announcing plans for a massive factory in Turkey.

The company is expected to invest $1bn (£780m) in the new facility, which will have the capacity to produce up to 150,000 electric and hybrid models each year.

BYD’s move comes after the European Union imposed provisional extra tariffs of 17pc on the car maker, on top of an existing 10pc tariff for vehicles imported from outside the bloc.

Other Chinese car makers face extra duties of up to 38pc. 

But BYD’s new factory will allow it to circumvent these taxes, as Turkey shares a customs union with the EU. At the same time, the UK’s trade deal with Turkey – which covers the automotive sector – means exports to Britain are also tariff-free. 

BYD this week said the plant is expected to improve the company’s “logistical efficiency” as it expands its European business. 

The car maker’s chairman, Wang Chuanfu, inked the deal with Mehmet Fatih Kacir, Turkey’s industry and technology minister, at a meeting on Monday.

Shanker Singham, a trade expert who has advised the UK government, said: “The big driver of this decision by BYD is the tariffs being levied by the European Union on electric vehicles.

“And actually, the whole purpose of those tariffs is to incentivise local production.

“Turkey is not a bad location to choose for that, because it has agreements not just with Europe and the UK but also with lots of other countries around the world.”

However, Mr Singham warned that BYD would have to follow strict “rules of origin” on cars exported to Europe and the UK.

These require that a certain proportion of a car’s value comes from components made locally or tariffs are levied. 

At present, that is set at 40pc but will rise to 55pc from 2027. The requirement for batteries is currently set at 30pc but will rise to 70pc over the period.

Mr Singham said: “They will have to be careful that there is serious manufacturing in Turkey – if what they are doing is just assembly, that would certainly not satisfy the rules.

“The rules are complicated and you are relying, to some extent, on the importer’s knowledge to say they satisfy the rules of origin.

“If you doubt it, the authorities can always go to the factory and audit.”

He noted similar concerns, for example, about Chinese cars being assembled in Mexico and then transported into the US tariff-free under the North American Free Trade Agreement.

It comes as the new Labour government mulls whether to follow the EU and impose tariffs on Chinese electric car makers, amid concerns they have benefited heavily from subsidies

Jonathan Reynolds, the Business and Trade Secretary, has previously said he would not rule out using “trade remedies” such as tariffs, if necessary. 

Production at BYD’s Turkey factory is expected to start in 2026.

The company has also announced plans for an electric car factory in Hungary that is also expected to be finished within three years. 

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2024-07-10T06:31:25Z dg43tfdfdgfd