China Report: How a Chinese battery company powers Turkey’s home-grown EVs
I’m currently traveling in Turkey, and even though I’m just a few days from starting a vacation and could be spending my time outside petting the street cats of Istanbul, I’m a journalist. I can’t not pay attention to the tech news around me. And 2023 is actually a big year for Turkey, but not only because it’s the republic’s 100-year-anniversary, with a high-stakes election coming up. On the technology side of things, this is the year when the country starts 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 maker. After a few rounds of delay, the EVs made by Togg are finally expected to hit the market this year, and they already seem pretty popular: just last week, the company completed a lottery drawing that selected 20,000 people to become the first batch of owners out of nearly 180,000 applicants. (The very first car was delivered on Monday to the Turkish president, Recep Tayyip Erdo?an, who has made Togg an important political project of his own.)
After working on my explainer about how China built its world-leading EV industry, I can see a lot of similarities between the path China took and the path Turkey is now on. Both countries are automotive manufacturing powerhouses but aren’t satisfied with staying at the lower end of the auto supply chain. EVs offer the chance to enter a new and fast-growing market, one 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 into the EV race, while Turkey has just entered it.
But there are more material connections between the two countries. Starting an EV business from scratch is hard; making batteries—the most important part of an EV—is even harder. That’s why Turkey isn’t going it alone and is instead partnering with Farasis, one of the top Chinese battery companies, just behind the 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 plant in Gebze, Turkey, that will produce lithium-ion batteries to power Togg’s electric cars.
Farasis is not the only Chinese tech company making its way into Turkey. In January, a Turkish newspaper reported that Alibaba is planning on investing more than $1 billion to build a data center and a logistics center in Turkey. Alibaba owns Turkey’s biggest e-commerce company, Trendyol, and its overseas shopping app AliExpress is often the most downloaded free app in Turkey’s Google Play store. Shein, another important 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’s not surprising that these companies are choosing Turkey, considering that Turkey has always had a close economic relationship with China. It plays a strong role in Beijing’s Belt and Road Initiative, and that role has only strengthened since the start of the Russia-Ukraine war, which made railway logistics through Russia less dependable.
But Turkey is also important because, sitting at the intersection of Europe and Asia, it can be an entry point for Chinese tech companies aiming to go into the European market.
The EV industry is a good example of that. Chinese battery companies have met with resistance trying to make inroads in the US. For example, when Chinese battery giant CATL entered into a deal with Ford in February to make EV batteries in Michigan, Senator Marco Rubio immediately asked the Committee on Foreign Investment in the United States to review the deal and also sought to ban EV companies from receiving tax credits if they used Chinese technologies.
