BYD to delay mass production at new Hungarian plant, make fewer EVs, sources say
At the same time, China's No. 1 automaker will begin producing cars earlier than expected at a new plant in Turkey, where labour costs are lower, and will significantly exceed its announced production plans, one of the sources said.
Shifting production away from Hungary in favour of Turkey would be a setback for the European Union, which has hoped that its tariffs on EVs made in China would attract Chinese investment and high-paying manufacturing jobs.
BYD's €4 billion (US$4.64 billion) plant in Szeged, southern Hungary, will start mass production in 2026 but will only produce a few tens of thousands of vehicles that year, the sources said.
That would represent a fraction of the plant's initial production capacity of 150,000 vehicles. It is eventually expected to reach a maximum capacity of 300,000 cars per year.
A third source confirmed the slower 2026 start-up.
BYD has stated it will launch operations at Szeged in October but has not provided a public timeline for mass production. Production is expected to increase in 2027 but still fall below planned capacity, the sources said.
Meanwhile, the automaker's US$1 billion plant in Turkey, initially scheduled to begin production at the end of 2026 with a capacity of 150,000 cars annually, will outpace the Hungarian plant as early as next year, one of the sources said.
Production at the plant in Manisa, western Turkey, will far exceed 150,000 cars in 2027, and BYD is set to further ramp up output in 2028, the source added.
BYD did not respond to requests for comment.
The sources requested anonymity as they were not authorised to discuss BYD's production plans publicly.
BYD is constructing the Hungarian plant to sell cars in Europe tariff-free. Currently, all BYD vehicles sold in Europe are manufactured in China and are subject to EU anti-subsidy tariffs in addition to the standard 10 per cent duty. For BYD, the total tariff stands at 27 per cent.
Many of the cars produced at the Turkish facility will also be exported to Europe and will not face tariffs under the EU-Turkey customs union.
A shift toward lower-cost production in Turkey highlights the challenge Chinese automakers face when trying to avoid punitive tariffs by producing in Europe, where wages and energy costs are relatively high.
Under right-wing Prime Minister Viktor Orban, Hungary — BYD's European headquarters — has become a key trade and investment partner for China.
Turkey has long been a low-cost production base for major automakers such as Toyota, Stellantis, Ford, Hyundai and Renault.
In March, Turkey announced that China's Chery would invest US$1 billion in a new plant with an annual capacity of 200,000 vehicles.
Soaring demand
BYD is aggressively expanding outside China, where it faces a fierce price war. Reuters reported last month that BYD had slowed its expansion domestically by reducing shifts at some factories and delaying the installation of new production lines.
The change in production strategy coincides with BYD's restructuring of its European operations following missteps, including the failure to secure enough dealerships and hire executives with local-market expertise, as well as offering hybrids in markets that favour fully electric vehicles.
Demand for BYD's competitively priced EVs is surging in Europe.
S&P Global Mobility projects that BYD will sell 186,000 vehicles in Europe this year, up from 83,000 units in 2024, with sales expected to nearly double again to just under 400,000 units by 2029.
BYD has also begun ramping up operations in Brazil, though the company is facing legal action there over alleged labour violations involving Chinese contractors working on its complex.
In Hungary, BYD had planned to install production line equipment by September at the Szeged site, which was first announced in 2023, two sources said.
However, in recent months it has delayed the tooling of the production line, which is being assembled at one of its manufacturing centres in China, the sources added.
Plans for the Szeged plant may still evolve. Over the past year, executives have discussed producing various models there, including the Atto 2, Atto 3 and Dolphin.
One source told Reuters that BYD plans to manufacture the popular Atto 3 and Dolphin EVs, along with the upcoming low-cost Seagull model at the site. Another source said the plant will produce the Atto 2, Atto 3 and Dolphin.
In Turkey, one source noted that BYD will manufacture the fully-electric Seal U SUV, the Sealion 5 (with uncertainty over whether it will be the fully-electric or plug-in hybrid variant), as well as two plug-in hybrid models: the Seal U DMi and the Seal 06 Dm-i.
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