The Turkish government has implemented a series of policy changes aimed at attracting investment in the electric vehicle (EV) industry, particularly from Chinese manufacturers. This comes amid concerns over rising Chinese car imports, which have reached a 10 percent market share in Türkiye.

The Daily Sabah reported that a presidential decree was published in the Official Gazette on July 5, easing additional tariffs on imported Chinese vehicles and providing the carmakers making investments in Türkiye an exemption from the tariffs. This translates to a significant reduction in import duties, dropping from the previously imposed 40 percent additional tariff to a standard 10 percent tariff, according to the decree.

With the latest incentive move on July 5, Chinese automakers would likely be in a more convenient position if they present their investment plans and could avail from the proximity of the Turkish market to the European Union (EU), where they are facing a new round of tariffs, according to Daily Sabah.

Last March, Türkiye imposed a 40 percent additional tariff on EV imported from China, raising the total tariff to 50 percent. In June 8, the policy was expanded to include all Chinese imported vehicles (including auto parts), with a minimum tariff of $7,000 , which is set to take effect on July 7.

China expressed strong dissatisfaction and firm opposition to the additional tariffs. The MOFCOM said such move is against WTO rules, and its changeable policies not only harmed the interests of enterprises on both sides and local Turkish consumers, but also aggravated Chinese companies' concerns about Turkish business environment and undermined their confidence in investing in Türkiye.

Turkish industry insiders believe the move aims to pressure Chinese auto companies, especially EV manufacturers, to invest in local production facilities. Alarmed by the rising market share of Chinese imported cars, which reached around 10 percent, the government aims to pressure Chinese automakers to invest in Turkish production facilities, potentially boosting the domestic auto industry.

Türkiye has long been trying to lure carmakers to the country, with especially Chinese companies on its radar to encourage them to invest. Türkiye has a customs union agreement with the EU, which last week slapped extra provisional duties of up to 38 percent on Chinese EV imports, according to Hürriyet Daily News.

The latest "tariff exemption," reported by Daily Sabah and citing industry sources, aims to incentivize Chinese automakers, particularly EV manufacturers, to invest in Türkiye. Negotiations are also underway with Chinese companies nearing investment commitments. These commitments, once finalized, will unlock tariff exemptions. However, failure to invest within the designated timeframe, as outlined by Turkish regulations, will result in the withdrawal of these benefits.