Ali Baydarol
The share of electric vehicles (EVs) in global automotive markets has been on the rise. In 2024, EVs accounted for 20% of new automobile sales worldwide. Similarly, the share of EVs in global automobile exports rose more than 20% compared to the previous year.
Today, China dominates the global EV market. At the country level, the Chinese market has the largest EV demand worldwide: of the 17 million EVs purchased globally in 2024, 11 million were purchased in China. Most notably, Chinese EV producers have dominated the Chinese market, with Geely Geome Xingyuan, BYD Seagull, and Wuling Mini standing out as the leading models.
China is also the world’s largest EV exporter, accounting for 40% of global EV exports and selling 1.25 million EVs abroad. For the first time, BYD’s EV sales exceeded Tesla’s in 2025. In close tandem with this, the market share of Chinese EV producers in Western Europe rose from 3.8% in 2021 to 9.6% in 2024. Such growth was achieved despite the fact that the purchase of Chinese EVs in the United States is extraordinarily difficult due to national security restrictions and high tariffs.
With the increasing competitiveness of Chinese EVs in the global automotive market, the United States has taken an increasingly protectionist turn during the second Trump administration.
Currently, the United States imposes a 15% tariff on EU-based car exports, which was 2.5% before Trump’s inauguration in January 2025. This is crucial for the EU, since the United States is its top automotive export destination, accounting for nearly 40% of its total exports.
Overall, the evolving global political economy reconfigurations have inevitably put large-scale European carmakers under severe economic pressure. In tandem with the recent protectionist turn of the second Trump administration, German car sales to the United States declined by roughly 14% in the first three quarters of 2025. Similarly, the sales of three German automobile firms (Volkswagen Group, Mercedes-Benz Group, and BMW) in China declined by 8% from January 2025 to September 2025.
Specifically, BMW recorded the lowest sales in China during the first quarter of 2025 compared with sales in the previous five years. Mercedes-Benz Group’s sales in the United States and China dropped by 17% and 27%, respectively, during the third quarter of 2025. Against the backdrop of these developments, the German automotive industry downsized its workforce by nearly 7%, amounting to about 51,000 layoffs, from June 2024 to June 2025.
It was in this context that on December 16, 2025, the European Commission proposed the
Automotive Package to the Council of the European Union (EU) and the European Parliament (EP). One central aim of the package is to set significant CO2 emissions targets for carmakers in the EU after Brussels put the expected ban on internal combustion engines (ICE) by 2035 on hold. Instead, the new proposal requires a 90% drop in tailpipe emissions compared to 2021 levels, rather than the previous target of 100%, thereby allowing the production of “plug-in hybrids (PHEV)”, range extenders, mild hybrids, and internal combustion engines” in the future.
The other building block of the package is to enhance the competitiveness of EU carmakers, thereby responding to the evolving political and economic strains on the EU automotive market globally. This includes providing super credits for EU-made EVs, supplying a total of EUR 1.8 billion in interest-free loans to boost the EU-made battery value chain, offering financial incentives for large firms to use zero- and low-emissions EU-made vehicles, andscutting administrative and compliance costs for EU carmakers by simplifying regulations. Though these measures appear to protect EU-based car producers, they are expected to seriously undermine the competitiveness of the EU’s top automotive import partners such as Türkiye. A public statement from the President of the Automotive Manufacturers Association (OSD) in Türkiye, Cengiz Eroldu in December 2025 outlines the potential damage of this policy on Türkiye’s automotive industry:
Excluding vehicles and parts produced in our country from this definition will eliminate the advantage that the Customs Union brings to Türkiye and the EU and will cause this structure to lose its function. Given Türkiye’s status as a Customs Union partner, it is extremely important that Türkiye is evaluated equally with the European Union in “Made in the EU” applications and not excluded from incentive mechanisms. The inclusion of Türkiye in this definition is a strategic necessity for the Turkish and European automotive industries to maintain their competitiveness.
Given this backdrop, this policy analysis examines the risks the Automotive Package poses to the Turkish-European automotive supply chain. The following section answers this question, elaborating on how the sale of European vehicle brands from Türkiye to Europe is undertaken by fully or partially EU-originated firms based in Türkiye and the presence of deeply integrated bilateral supply chains between Türkiye and Germany and between Türkiye and France. Owing to these, Türkiye ranks as the fourth largest exporter of cars to the EU and fourth largest importer of cars from the EU.
The third section then analyses what Türkiye can do to ensure that the Turkish-European automotive supply chain is not harmed, underscoring the scope of Türkiye’s lobbying activities and the proposals it should pursue. Lastly, the report highlights that Türkiye currently plays a limited role in the EV export market. For Türkiye to strengthen its competitiveness in this regard, the definition of “Made in the EU” should include Türkiye so that the Turkish market can ensure adaptation to EV technologies in line with EU market demand.
The automotive industry occupies a central place in the Turkish economy. In 2024, it recorded exports of USD 37.2 billion, the largest among all sectors, which corresponded to 17% of Türkiye’s total exports. More recently, the automotive industry in Türkiye has been close to setting a new annual record. Over the January 2025–November 2025 period, automotive exports reached USD 37.13 billion, with 61% from automobile production and the rest from auxiliary industries.
In 2024, 60% of Türkiye’s automotive exports were destined for the EU. This translated into Türkiye is ranked fourth among the EU’s top import partners in the automobile industry. Notably, most firms engaged in exports are either fully or partially foreign-owned. One key example is the American-Turkish consortium Ford Otosan, which accounted for 37% of Türkiye’s total automotive exports in 2025. Another one is the fully Japanese-owned Toyota Automotive Industry Türkiye Inc., which made up 14% of the total automotive exports.
Fully or partially EU-owned firms, such as Mercedes-Benz Türk, Man Türkiye, Oyak Renault, Tofaş and Türk Traktor, constitute the other building blocks of Türkiye’s automotive industry. In total, their exports amounted to 32.36% of Türkiye’s automotive exports in units.
Specifically, two German firms, Mercedes-Benz Türk and Man Türkiye, dominate Türkiye’s bus exports, accounting for 71% of total exports from January 2025 to November 2025. Mercedes-Benz Türk alone accounted for 69% of Türkiye’s total truck exports in the same period.
Importantly, Mercedes-Benz’s top bus exporting destinations were Spain, Portugal, and France, and top truck exporting destinations were Poland, Spain, and Italy. Similarly, the European region is the leading destination for Man Türkiye’s exports.