Economy Update – Follow-Up
Chinese automotive manufacturer BYD is actively evaluating the German market for the establishment of its third assembly facility in Europe. This decision comes in the wake of the European Union’s imposition of customs duties on Chinese electric vehicles last year, which has posed challenges for foreign manufacturers operating in Europe’s largest economy and automotive market.
Driven by a need to bolster sales of competitively priced vehicles amidst increasing local competition and diminishing demand in China, BYD, along with other Chinese automotive firms, is keen on setting up manufacturing and assembly operations within Europe. This strategy is particularly focused on circumventing the aforementioned tariffs on electric vehicles manufactured in China.
Sources indicate that Germany stands out as a preferred location for BYD, despite notable challenges such as elevated labor and energy costs, alongside issues related to productivity and operational flexibility. However, it is important to note that a definitive decision has yet to be made.
Aiming to Eliminate Tariff Barriers on Electric Vehicles
In a recent discussion, Stella Lee, the executive deputy to the company’s president, articulated that BYD is seriously considering the establishment of a new facility focused on serving the European market within the next two years. This potential site would complement their existing operations in Hungary and Turkey, although specific details regarding its location have not been disclosed.
While Germany is currently the leading candidate for this new facility, ongoing internal discussions highlight concerns over the high costs associated with labor and energy, as well as low productivity and flexibility challenges within the country. No final resolution has been reached at this stage.
The strategic assessment also includes the possibility of setting up a third assembly plant in Western Europe, aimed at enhancing brand presence and fostering consumer confidence through localized production.
Furthermore, BYD remains aligned with directives from Beijing discouraging investment in nations that have supported tariffs on Chinese-made electric vehicles. As a result, the company is currently less inclined to pursue opportunities in certain EU member states, including Italy and France, due to their advocacy for such customs duties.
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