China’s BYD, which vies with Tesla for the title of the world’s top maker of battery electric vehicles, has agreed to build a $1 billion car factory in Turkey, the Turkish government has announced.

BYD’s CEO Wang Chuanfu and Turkey’s Industry and Technology Minister Mehmet Fatih Kaci signed the agreement in Istanbul, according to a statement from the Turkish ministry Monday. Turkish President Recep Tayyip Erdogan attended the signing ceremony, it said.

“We aim to meet the growing demand for new-energy vehicles in the region and reach consumers in Europe,” the statement cited BYD representatives as saying.

The announcement came just days after provisional additional duties on imports of Chinese-made EVs into the European Union came into effect. The tariffs, ranging from 17.4% to 37.6%, are aimed at stopping a flood of cheap Chinese cars built with what the EU deems unfair support from the government.

Turkey is in a customs union with the EU. That means vehicles can be exported from the country to the trading bloc tariff-free.

According to the agreement with Turkey, BYD will invest about $1 billion in the factory, which will be able to produce 150,000 electric and hybrid vehicles annually, and set up a research and development center for sustainable mobility technologies at the plant.

The factory is expected to start production at the end of 2026 and provide as many as 5,000 jobs in the country.

CNN has reached out to BYD for comment but hasn’t received a response.

The EU’s decision earlier this year imposed an extra 17.4% tariff on the vehicles BYD ships from China to the bloc, which also has a standard 10% duty on all car imports.

Talks between the EU and China are expected to continue but, if no agreement is reached, the additional tariffs will become definitive in November.

BYD already announced in December that it would build an EV factory in EU member Hungary, becoming the first major Chinese automaker to build passenger cars in Europe.

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Beware, Elon Musk — BYD just took its next step toward world domination

No matter the noise and trash talk Elon Musk has to say...BYD of China is here to stay as close as Europe and America.

• BYD is ramping up its quest for global electric vehicle dominance.

• The Chinese EV maker has struck a deal to build a $1 billion factory in Turkey.

• It could provide BYD with a route around the EU's punishing tariffs on Chinese EV makers.

BYD is ramping up its quest for global EV dominance.

The Chinese EV giant, which briefly overtook Elon Musk's company as the world's top seller of EVs last year, has struck a deal to build a $1 billion factory in Turkey.

According to a statement shared on X by Turkey's minister of industry and technology, Mehmet Fatih, the factory is slated to begin production by the end of 2026 and will have capacity to produce around 150,000 vehicles a year.

Business Insider contacted BYD for comment but didn't immediately hear back.

It's BYD's second planned factory in Europe and could provide the company with a route around the punishing tariffs the European Union imposed on Chinese EV firms last month.

Turkey is part of the EU's Customs Union, and any BYD cars manufactured there could avoid the 17.4% additional tariff the EU slapped on BYD vehicles imported from China.

BYD and its rivals are walking a fine line as they rapidly expand globally, even as Western governments launch crackdowns to try and protect their own auto industries from a wave of cheap Chinese imports.

Building factories and moving production locally may be one way to circumvent tough trade restrictions, though it's possible new rules will be established to prevent this. Plans by Chinese EV giants BYD, MG, and Chery to build factories in Mexico have sparked concern among US officials over fears they could be used as a "backdoor" into the US market.

Philip Nothard, insight and strategy director at automotive consultancy Cox Automotive, told Business Insider that BYD's latest move was proof of the Chinese carmaker's ambitious plans for international and European investment.

"Although tariffs may create slight bumps in the road, the likes of BYD, Chery, and others have a strategy that means they can react swiftly to any challenges," he said.

"These moves are as much about supply chains, local resource efficiencies, and international growth as they are about tariffs," Nothard added.

BYD's growing presence in Europe is another potential headache for Elon Musk.

Tesla, which has a gigafactory in Germany, counts Europe as one of its most important markets — but the automaker, which imports certain models to Europe from China, has also been hit by the EU's China crackdown and warned earlier this year that prices of the Model 3 in Europe could rise as a result.

Tesla is locked in a global struggle for sales with BYD, with a recent report from auto research firm Counterpoint indicating that Tesla is set to be overtaken by its Chinese rival as the world's largest seller of EVs later this year.

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