Warren Buffett-backed Chinese EV giant BYD Co. Ltd. BYDDY BYDDF is reportedly contemplating establishing a third assembly plant in Germany.

What Happened: According to a report by Reuters, BYD is looking to expand its manufacturing footprint in Europe and is considering Germany for its third plant. This move comes after Germany, Europe’s largest economy, opposed EU tariffs on Chinese-made electric vehicles last year.

The company is planning the third plant to expand its manufacturing footprint in Europe to boost sales of its affordable vehicles and compete with European rivals. With this, the company aims to circumvent import tariffs imposed by the EU on China-made EVs in the previous year.

Stella Li, BYD’s executive vice president, previously mentioned the possibility of a third European facility in an interview with Automobilwoche. While Hungary and Turkey are already in the works, Germany is a leading candidate for the new plant.

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However, the decision is under scrutiny due to Germany’s high labor and energy costs, as well as low productivity and flexibility. The report, citing a source who wished to remain anonymous, noted that BYD is also considering Western Europe to enhance brand recognition and acceptance as a local manufacturer.

Why It Matters: The potential establishment of a new plant in Germany is part of BYD’s aggressive expansion strategy in Europe. The company has already made significant strides by entering the Greek market with its popular Atto 3 and Seal EV models.

BYD is adhering to Beijing’s directive to avoid investing in countries that supported the EU tariffs, excluding some EU nations like Italy and France from consideration. The final decision will depend on BYD’s sales performance in Europe and the capacity utilization of its Hungarian and Turkish plants.

In July 2024, BYD announced a $1 billion factory in Turkey. This facility is expected to produce 150,000 EVs annually, further solidifying BYD’s foothold in the region.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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