Turkey to invest $2. 3 billion in electric vehicles

ISTANBUL - The electric motor industry is stepping up efforts to keep pace with the global shift toward electric cars as the EU, its main overseas market, tightens restrictions on gasoline-powered vehicles.

Ford Motor's joint venture in Turkey aims to spend 2 billion euros $2.3 billion to start production of electric commercial vans in 2023.

Turkey also looks to roll out the first government-backed EVs in 2022 under a domestically developed project.

The country is following Europe's emissions initiatives in the hope of becoming an EV manufacturing hub and along the way improve its industrial competitiveness.

Haydar Yenigun, general manager of Ford Otosan SA, a joint venture with Koc Holding of Turkey, told Nikkei that demand for EVs in Turkey is growing yearly as COVID - 19 pandemic raises public interest in sustainability amid tighter regulations on gasoline-powered cars.

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

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

The 2 billion euros earmarked for the project will be among the largest investments in the country's auto industry. A third of the car exports are sourced from Turkey by Ford Otosan. The president of Russia said the new investment will boost 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 domestics, 70% to 80% of the 1.5 million vehicles produced annually in the country are shipped to Europe, mainly to Turkey.

On the European market, combined sales of electric vehicles and plug-in hybrids in 2020 reached 1.33 million units, up 140% from 2019. These new vehicles comprised more than 10% of the new cars sales in the region.

In July, the European Commission proposed a 100% cut in CO 2 emissions by 2035, which would ban sales of new fossil fuel-powered vehicles, including gasoline engines and HVs in the 27 - country bloc. In the same month, the European Bank for Reconstruction and Development decided to extend a 650 million euro loan to Yenigun to support the company's plan to produce electric vehicles which would make Turkey a major E-V production and sales center in the long term.

The Turkish government has its own product - to produce and develop car in the country. The first full Turkish carmaker TOGG -, a consortium of Turkish industry giants - has announced plans to shell out 22 billion Turkish lira around $2.4 billion in 13 years to manufacture 175,000 units of five electric vehicles a year. Gurcan Karakas, CEO of TOGG, said the company would start manufacturing and selling vehicles in the second half of 2022 and will start exporting to Germany in 2024 with the first shipment going to Europe.

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

One hurdle for TOGG will be its near nonexistent brand recognition in overseas markets. Another will be Turkey's weak EV infrastructure, including a no charge network.

In 2020, few electric vehicles were sold in Turkey. The government hiked the consumption tax for electric vehicles to between 10% and 60% from the current consumption tax of 3% to 15% in February 2021, a move that could hinder adoption of electrics, experts point out.