LMC Automotive’s unique Global Hybrid & Electric Vehicle Forecast is continuously being enhanced by the addition of more individually forecasted countries. The latest is Turkey, a market which in terms of total vehicles sold and produced is one of the largest in the pan-European region (sixth and fifth respectively) although in sales per capita terms it still lags far behind most countries in Europe.
But, when looking at Battery Electric Vehicle (BEV) sales alone, Turkey is one of the smallest markets in the region. Total BEV sales were less than 3,000 units last year, ranking it, in volume terms, 21st out of the 30 countries we track in Europe. Most notably, its BEV share was only 0.5%, which was the lowest in Europe, except for Russia.
So, while these figures may not come as much of a surprise, given Turkey’s comparatively low GDP per capita and limited support for BEVs, they raise the question: how will the Turkish BEV market evolve over this decade and into the next?
Firstly, unlike Russia, Turkey has closely pegged itself to the European Union (EU) when it comes to noxious vehicle emission standards (Euro 5, Euro 6 etc.). Secondly, Turkey has been in a Customs Union with the EU since 1995 and because it has significant imports and exports to and from the EU, maintaining common standards is essential. However, while Turkey has adopted like-minded noxious emission standards, it does not have in place CO2 reduction targets for new car sales, unlike the EU. As a result, there is currently little regulatory pressure for car makers to sell electrified variants in Turkey. Furthermore, more than half of the BEVs sold in Turkey this year were Premium vehicles and since there is negligible regulatory pressure, price-sensitive Turkish consumers are, for now, less disposed to purchase more mainstream BEVs, given their higher upfront cost compared with their internal combustion engine (ICE) counterparts.
While it is not clear whether Turkey will adopt EU-style CO2 reduction targets, at the 2021 COP26 conference in Glasgow a commitment was given to ‘work intensely towards accelerated proliferation and adoption of zero-emission vehicles’. Turkey has also set a new net-zero carbon target of 2053. Given that the average age of a vehicle in Turkey is 13 years, it seems reasonable to assume that a phase-out of ICE and hybrid light vehicle sales by 2040 will be necessary to achieve this goal.
Based on recent history, and given the limited number of public charging points plus the low BEV penetration rate, this theoretical target could be deemed ambitious. However, recent announcements and investments into battery electrification, particularly on the supply side, give some hope. For example, Togg, Turkey’s newest local brand, will only build BEVs and will launch its first model, a C-segment SUV, next year. In addition, Ford Otosan has already started production of the e-Transit in Turkey and Ford and Koç Holding A.Ş recently signed a non-binding MOU with SK On Co., Ltd. to create one of Europe’s largest commercial vehicle battery production sites in Turkey.
Given the importance of the automotive industry for the Turkish economy, the shift to electrification, particularly by its largest trading partner (the EU), and in anticipation of the launch of a new domestic BEV brand next year, we expect BEV sales to receive greater support from the government in future. It is not yet clear what form such support will take although it could involve cuts in Turkey’s special consumption tax (ÖTV) or the use of other incentives. Turkey’s dependency on oil imports is currently fuelling sky-high inflation and could well encourage policymakers to consider reducing Turkey’s oil dependency at a faster pace. Promoting BEVs would support this objective.
Because of the limited number of incentives and price sensitivity of the market, we take a cautious view of how quickly BEV sales will grow in Turkey. Nevertheless, given external and industry factors, we expect Turkey’s BEV market to accelerate over the forecast horizon, although at a considerably slower pace than its EU neighbours.