• BYD favors Spain for its relatively low manufacturing costs and clean energy network, Reuters reported.
• BYD aims to locally produce all EVs sold in Europe within three years, which would help it avoid EU tariffs.

BYD (HKG: 1211) is considering setting up a third European car factory in Spain to serve the European market, Reuters reported today, citing two sources.

BYD favors Spain due to its relatively low manufacturing costs and clean energy network, one source said.

The Chinese new energy vehicle (NEV) maker is building a passenger vehicle plant in Hungary that is set to begin production later this year.

In July last year, BYD signed an investment cooperation agreement with the Turkish government to build a NEV production base there with an investment of about $1 billion, which is scheduled to start production by the end of 2026.

BYD aims to locally produce all electric vehicles (EVs) sold in Europe within three years, which would help it avoid EU tariffs, the Reuters report said.

Alberto De Aza, BYD's regional manager for Spain and Portugal, told Reuters last month that Spain would be an ideal location for further expanding its European manufacturing operations due to its industrial infrastructure and low-cost electricity.

Another source cautioned that BYD has not yet announced a final decision and is still considering countries beyond Spain, as noted in today's Reuters report.

The final decision on the plant is expected by year-end, pending approval from Chinese regulators, the report said.

Spain's diplomatic and commercial ties with China have significantly warmed in recent years. Last year, the country abstained from voting on EU tariffs for Chinese-made EVs, Reuters noted.