China report: How a Chinese battery company is powering Turkey’s electric vehicles

I’m currently traveling in Turkey, and although I’m only a few days away from going on vacation and I could spend my time outside petting Istanbul’s street cats, I’m a journalist. I can’t help but pay attention to the tech news around me. And 2023 is actually a big year for Turkey, but not just because it’s the 100th anniversary of the republic, with a high-stakes election coming up. Technologically, this is the year the country begins shipping its first domestic electric vehicle, a symbol of future economic growth.

In 2018, five of Turkey’s most influential companies formed Togg, the country’s first electric vehicle manufacturer. After a few laps of delay, electric vehicles made by Togg are finally set to hit the market this year, and they already seem pretty popular: Last week, the company completed a raffle that selected 20,000 people to become the first group of owners. out of nearly 180,000 applicants. (The very first car was delivered to Turkish President Recep Tayyip Erdoğan on Monday, who has made Togg an important political project in its own right.)

After working on my explainer on how China built its global EV industryI see a lot of similarities between the path taken by China and the path taken by Turkey. Both countries are auto manufacturing powerhouses, but are not content to stay at the lower end of the auto supply chain. Electric vehicles offer the opportunity to enter a new, fast-growing market that is poised to disrupt the traditional automotive industry and become an essential part of the global energy transition. The difference is that China is already a few laps away from the EV race, while Turkey has just entered it.

But there are more material ties between the two countries. Starting an electric vehicle business from scratch is difficult; making batteries – the most important part of an EV – is even more difficult. This is why Turkey is not going it alone and is instead partnering with Farasis, one of China’s leading battery companies, second only to industry leaders like CATL, BYD and CALB. In 2019, Togg and Farasis formed a joint venture named SIRO, each taking a 50% stake, to build a battery factory in Gebze, Turkey, which will produce lithium-ion batteries to power Togg’s electric cars.

Farasis isn’t the only Chinese tech company setting foot in Türkiye. In January, a Turkish newspaper reported that Alibaba planned to invest over $1 billion to build a data center and logistics center in Turkey. Alibaba owns Turkey’s largest e-commerce company, Trendyol, and its AliExpress shopping abroad app is often the most downloaded free app on Turkey’s Google Play Store. Shein, another big Chinese player in the fast fashion industry, has also started manufacturing in Turkey after producing exclusively in China for a decade, The Wall Street Journal reported in December.

It is not surprising that these companies choose Turkey, given that Turkey has always had a close economic relationship with China. It plays an important role in Beijing’s Belt and Road Initiative, and that role has only grown stronger since the start of the Russian-Ukrainian war, which made rail logistics across Russia less reliable.

But Turkey is also important because, located at the intersection of Europe and Asia, it can be an entry point for Chinese technology companies wishing to enter the European market.

The electric vehicle industry is a good example. Chinese battery companies have met resistance trying to make inroads in the United States. For example, when Chinese battery giant CATL struck a deal with Ford in February to manufacture electric vehicle batteries in Michigan, Senator Marco Rubio immediately asked the Committee on Foreign Investment in the United States to review the agreement and also sought to ban electric vehicle companies from receiving tax credits if they used Chinese technologies.