Turkey’s auto industry switches to electric vehicles as EU tightens CO2 rules

ISTANBUL – Turkey’s auto industry is stepping up efforts to keep pace with the global transition to electric vehicles as the European Union, its main overseas market, tightens restrictions on gasoline cars.

Ford Motor’s joint venture in Turkey plans to spend € 2 billion ($ 2.3 billion) to start production of electric commercial vans in 2023.

Turkey is also planning to roll out its first nationally developed electric vehicles in 2022 as part of a government-backed project.

The country is following Europe’s carbon-free initiatives in hopes of becoming a manufacturing hub for electric vehicles and, along the way, boost its industrial competitiveness.

Haydar Yenigun, managing director of Ford Otosan, a joint venture with Koc Holding of Turkey, told Nikkei that demand for electric vehicles in Turkey grows every year as the COVID-19 pandemic sparks public interest in sustainability in a context of stricter regulations on gasoline cars.

The company hopes to achieve carbon neutrality in passenger car production by 2026 through the sale of electric vehicles and hybrid vehicles in the European Union, according to Yenigun. By 2030, all Ford Otosan passenger cars will be electric, he said.

Haydar Yenigun, Managing Director of Ford Otosan. (Photo courtesy of Ford Otosan)

In the first half of 2023, the company plans to start producing fully electric and hybrid variants of the next version of its Transit van for the European market. The vehicles will be assembled at its factory in Golcuk in Kocaeli province, northwestern Turkey. Ford Otosan wants to build production lines for electric vehicles and also manufacture batteries.

The 2 billion euros allocated to the project will be among the largest investments in the automotive industry in the country. Although details of the production plan have not been disclosed, the company’s annual production is expected to increase from 440,000 to 650,000 units.

Ford Otosan accounts for a quarter of Turkey’s car exports. President Recep Tayyip Erdogan said the new investment would increase the company’s annual exports to $ 13 billion, from $ 5.9 billion.

Turkey, which has a customs union trade agreement with the EU, is a major production center for cars sold in Europe. Since Turkish consumers tend to prefer imported cars to domestic ones, 70-80% of the 1.5 million vehicles produced annually in the country are shipped abroad, mainly to Europe.

In the European market, the combined sales of electric and plug-in hybrid vehicles in 2020 reached 1.33 million units, up 140% from 2019. These new energy cars represented more than 10% of car sales new in the region.

In July, the European Commission proposed a 100% reduction in CO2 emissions by 2035, which would ban the sale of new fossil-fueled vehicles, including gasoline-powered cars and HVs in the bloc of 27 countries. . In the same month, the European Bank for Reconstruction and Development decided to grant a loan of 650 million euros to Ford Otosan to support the company’s plan to manufacture electric vehicles, making Turkey a major hub. long-term production and sale of electric vehicles, Yenigun predicted.

The Turkish government has its own car development and manufacturing project in the country. The first all-Turkish automaker TOGG – a consortium of Turkish industry giants – has announced plans to shell out 22 billion Turkish liras (roughly $ 2.4 billion) over 13 years to manufacture 175,000 units of five models electric vehicles per year. TOGG CEO Gurcan Karakas said the company will start producing and selling vehicles in the second half of 2022 and start exporting to Europe in 2024, with the first shipment to Germany.

TOGG will partner with Chinese battery maker Farasis Energy to produce lithium-ion batteries.

An obstacle for TOGG will be its almost non-existent notoriety in foreign markets. Another will be the weakness of Turkey’s EV infrastructure, including the lack of a charging network.

In 2020, barely 800 electric vehicles were sold in Turkey. The government has raised the consumption tax on electric vehicles to between 10% and 60%, from the current 3% to 15% in February 2021, a move that could hamper the adoption of electricity, experts say.

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