EV tax breaks double sales, draw European factories

ISTANBUL

Türkiye’s generous tax incentives for electric vehicles (EVs) doubled sales in the first quarter of 2025, prompting European manufacturers like Volvo and Tesla to prioritize production for the Turkish market, industry sources have said.

However, the policy is squeezing local producers struggling to compete.

Türkiye, one of the highest-taxed auto markets, has slashed EV taxes, sparking a surge in demand. EVs with untaxed prices below 1.45 million TL and motors under 160 kW face just 10 percent tax, the lowest rate, while plug-in hybrids (PHEVs) meeting criteria fall into a 30 percent bracket.

Conventional petrol, diesel, and hybrid vehicles, however, carry at least 80 percent tax, hitting local manufacturers like Fiat, Renault and Toyota hardest.

Volvo began producing its EX30 electric model last week at its Ghent, Belgium plant, earmarking much of the first two months’ output for Türkiye.

Alican Emiroğlu, Volvo Car Türkiye’s general manager, said, “The EX30, with a Türkiye-exclusive 150 kW motor option, makes Türkiye a priority market. Customers can place orders online by late April, with pricing revealed at our mid-June launch. By July, the fully electric EX30 will hit Turkish roads.”

Tesla, facing a 37.2 percent sales drop in Europe to 54,000 units in Q1 due to boycotts over Elon Musk’s political stance, found relief in Türkiye’s robust demand.

After opening online orders for its new Model Y last week, Tesla sold nearly 4,000 units in seconds. Company officials confirmed Berlin’s factory will focus on Türkiye, stating, “Berlin prioritizes Model Y SR production for Türkiye, with significant stock added today. No new bulk listings this week, but more inventory is planned next week.”

The tax disparity fuels Türkiye’s appeal for foreign brands.

This leaves local producers like Renault, Fiat, and Toyota struggling to compete, with outdated tax thresholds eroding their edge. While European factories run at full tilt for Türkiye, local plants risk undercapacity.