Turkey's increase in EV tax will impact Tesla and BYD, as the government supports domestic brand TOGG
Turkey's decision to increase the special consumption tax (OTV) on imported electric vehicles (EVs) from 10% to 25% is set to impact the sales of Tesla and BYD significantly. The tax hike, aimed at supporting domestic automaker TOGG, is expected to raise the prices of EVs from these brands, potentially weakening demand [1][2].
The revised OTV framework introduces a 15 percentage point increase for all electric vehicles, with final rates now ranging from 25% to 75%. As a result, Tesla's popular Model Y, previously priced around 1.87 million Turkish lira (~$46,100) under the 10% tax bracket, is expected to become about $6,000 more expensive [1]. BYD, currently importing all its EVs to Turkey, also faces higher costs from this tax increase while planning local production for 2026 to mitigate such duties [1].
Before the tax hike, Tesla's Model Y was the bestselling car in Turkey, underscoring the significant growth that may now slow down due to rising costs [2]. However, Tesla has announced a temporary pause in website listings for July, suggesting an adjustment to its pricing strategy [3]. BYD, on the other hand, reported strong sales in the first half of 2025, selling 25,501 imported vehicles in Turkey between January and June [4].
The tax overhaul is part of a broader strategy to support domestic vehicle production led by Turkish brand TOGG and reduce Turkey's current account deficit. Locally produced internal combustion engine vehicles will benefit from a 5 to 10 percentage point reduction in OTV rates, providing a competitive advantage over imported EVs [1].
Customers whose invoices have already been issued and taxes paid will not be affected by the change. Tesla has retained the original base price for customers with existing vehicle orders, with only the updated OTV rate applied [3]. BYD has announced plans to begin local production in Turkey by 2026 [1].
The regulation is intended to prevent public revenue losses from the growing market share of EVs and reduce the country's reliance on imported vehicles. The overall inflationary impact of the measure is estimated at just 0.0019 percentage points annually [5]. The policy goals include supporting local industry and curbing imports, as excluding small commercial vehicles from the new rules may weaken the policy's effectiveness, given their high import share [6].
In summary, the increased import tax is expected to lead to higher prices for Tesla and BYD EVs by about $6,000 or more, potential softening of demand for their vehicles in Turkey, increased competitive advantage for domestic EV producer TOGG, and short-term pressure on BYD until local production begins in 2026 [1][2]. The tax hike is expected to reshape Turkey's EV market landscape.
The government's decision to increase the special consumption tax (OTV) on imported electric vehicles (EVs) in Turkiye has financial implications for companies like Tesla and BYD, as their EVs are set to become more expensive. With the new tax rates, the popular Model Y from Tesla, previously priced at around 1.87 million Turkish lira, could increase by about $6,000. The Turkish authorities aim to support local EV production through this measure, with domestic automaker TOGG benefiting from reduced OTV rates for locally produced vehicles. The tax hike may impact business strategies for Tesla and BYD, with Tesla temporarily pausing its website listings for July and BYD planning local production in Turkey by 2026. The policy intends to reduce Turkiye's reliance on imported vehicles and minimize public revenue losses from the growing EV market, although the overall annual inflationary impact is estimated to be minimal.
