Erdogan Rolls Out First Turkish EV Ahead of Elections

(Bloomberg) -- Turkey rolled out its first domestically-produced electric vehicle at a ceremony on Saturday as President Recep Tayyip Erdogan seeks to highlight economic successes ahead of elections next year.

Most Read from Bloomberg

“Turkey’s domestic car, Togg, will hit the roads of Europe with all of its models,” Erdogan said after driving the first vehicle to leave the production line. “They will say ‘crazy Turks’ are coming,” he added. Turkey has inked a deal with one of the world’s most prominent companies to build a lithium ion battery factory near Togg’s production site in Bursa, Erdogan said. He did not name the company.

Sales of the first Togg model, the C-segment SUV, are set to begin at the end of the third quarter of 2023. Turkey’s Automobile Joint Venture Group, the consortium of local companies behind the “domestic car” project, aims to start producing other models in following years. The plan is to export the Turkish EV to Europe and then the rest of the world after 15-18 months of domestic sales only.

“The production capacity we have built at the moment is 100,000 vehicles per year,” said Gurcan Karakas, CEO of the joint venture. But the initial target is to produce 17,000-18,000 C-SUV’s in 2023 and increase output gradually, he added. The price of Togg is not determined yet, but is expected to be in February, when preliminary sales begin.

The ruling party wants to show off major projects ahead of elections scheduled for June 2023 to contrast with the country’s deepening economic woes amid soaring inflation driven by the central bank’s unorthodox interest-rate cuts.

The state has backed the project with tax cuts, free land, low borrowing costs and a government purchase guarantee of 30,000 vehicles a year until the end of 2035. Car prices have skyrocketed this year due to inflation.

Car sales in Turkey fell 8.2% in the first nine months of 2022 from the same period last year, according to industry association ODD. The slump was driven by the lira’s 28% drop against the dollar so far this year, making it the second-worst performer in emerging markets.

But the decline in the lira has helped boost exports. Turkey is an important production automotive hub and a major exporter to Europe. Major car makers including Ford Motor Co., Toyota Motor Corp. and Mercedes-Benz AG have factories in the country. In September, Turkey’s automotive production rose 20.5% as auto exports climbed 11.3% yearly in dollar terms.

‘Political’ Project

The Togg is not Turkey’s first domestically produced car. Back in 1961, Turkish engineers produced four Devrim cars, which like the Togg debuted on Republic Day at a ceremony presided over by the president. But the car never made it past the prototype stage.

The new electric vehicle has been in development since 2018. Anadolu Grubu, BMC, Turkcell and Vestel Elektronik each own 23% of the joint venture, with the remainder owned by a business lobby. The first cars to leave the production line will be small SUVs, with four other models to follow in the future.

The Togg, which was designed by Italy’s Pininfarina SpA, will be built from 65% locally-made parts by 2025, the company said, up from 51% initially. The company has said it plans to produce 1 million cars by 2030, and that the project will contribute $50 billion to the Turkish economy over the next 15 years.

But opposition parties have slammed what they argue is the project’s overtly political nature. Leaders such as CHP’s Kemal Kilicdaroglu and IYI Party’s Meral Aksener declined to attend the ceremony.

“The Togg Project has become a political show,” said CHP Spokesperson Faik Oztrak.

(Adds comments from Turkey’s President Erdogan)

Most Read from Bloomberg Businessweek

©2022 Bloomberg L.P.