By Giulio Piovaccari

Milan (Reuters) – The Chinese manufacturer of electric vehicles (VE) BYD plans to build its third factory in Europe in Germany, a source close to the file told Reuters, after the greatest economy in the region opposed customs duties of the European Union on the VE Chinese last year.

Chinese car manufacturers seek to establish production and assembly sites in Europe in order to sell more cars in the region and thus challenge their European competitors. China, which is the largest automotive market in the world, faces a slowdown in demand.

They also try to avoid customs duties imposed last year by the European Union on the VE manufactured in China.

Earlier this month, the executive vice-president of the Stella Li group revealed in an interview with Automobilwoche that Byd planned to build a third site to aim for the European market in the next two years, in addition to the two sites under construction in Hungary and Turkey, without specifying specific countries.

According to the source, Germany is byd’s first choice, but this option was the subject of internal debates due to the high costs of labor and energy, low productivity and the lack of flexibility of the country. No final decision has yet been made.

The source required anonymity, having no right to speak to the media.

Byd did not respond to a request for comments immediately.

The company plans to open a third site in Western Europe in order to strengthen its image with European customers, said the source.

The group must nevertheless stick to a Beijing directive asking companies not to invest in countries that have supported Customs Duties of the EU, she said. Byd therefore excludes several countries in the block, such as Italy and France.

In January, Reuters reported that the Chinese authorities and the country’s car manufacturers planned to take up certain German sites in the process of being closed, especially those of Volkswagen.

The Christian Democratic Union (CDU) of the future German Chancellor Friedrich Merz has promised to lower corporate tax and attract qualified employees. It is also particularly concerned with supporting the automotive sector, the most profitable in the country.

The party is nevertheless opposed to the idea of ​​relying on subsidies, which the coalition of Chancellor Olaf Scholz has regularly done during its mandate, especially when it has released nearly 10 billion euros for Intel factory project whose construction has since been postponed by several years.

According to estimates by S&P Global Mobility, sales from byd in Europe should more than double this year to reach 186,000 vehicles after 83,000 vehicles in 2024. They should then continue to grow to reach nearly 400,000 vehicles in 2029.

(Giulio Piovaccari report in Milan with Nick Carey in London; Pauline Foret, edited by Kate Entringer)

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