BYD intends to localize production of its compact electric SUV, the Atto 2, in Hungary. This should reduce its retail price by several thousand euros compared to the lots built in China, avoiding import fines. However, the Hungarian site itself is facing regulatory scrutiny from Brussels over alleged state subsidies.
BYD is betting that European production of the Atto 2 will ultimately unlock its promise as a budget-friendly electric SUV. The company confirmed it will add the model to its assembly line in Szeged, Hungary, making it the second car produced there after the Dolphin Surf hatchback.
A start date has not been communicated, but the relocation signals BYD’s intent to position the Atto 2 as a cost leader on its segment. Who will follow?
Absorbing excess effect
Currently shipped from China, the electric version of the Atto 2 starts from just under €30,000 in Belgium. However, these prices fall under the 17 percent punitive tariff levied on BYD for its battery-electric vehicles built in its homeland.
Though BYD claims to absorb the effect of the excess duty on customer prices, it’s unclear whether this covers the full amount of the duty. However, with local production expected to start sometime in 2026, those tariffs will no longer apply, possibly shaving thousands of euros off the retail price.
This would push the Atto 2 into a privileged price position against European mainstays like the Peugeot e-2008 (€40,600) and the Opel Mokka Electric (€36,690). Its main competitor would be the eagerly anticipated Volkswagen ID. Cross, expected to cost between €28,000 and €30,000.
Subsidized factory?
The Atto 2 rides on BYD’s e-Platform 3.0 and features a space-saving, high-rigidity cell-to-body design. A 45.1 kWh LFP battery currently offers 312 km of WLTP range and is paired with a 130 kW motor. Yet the model’s real competitive edge may only emerge once EU import tariffs are side-stepped and production scales in Hungary.
That factory, however, is not without complications. European regulators have raised concerns over potential Chinese state support for the plant’s construction.
The European Commission is investigating whether BYD benefited from unfair subsidies, an ongoing investigation that could result in financial penalties. Hungarian officials, for their part, say they were not consulted before the investigation began and have expressed displeasure over the EU’s lack of communication.
Plug-in hybrid
This tension is particularly important as the EU is shaping a ‘Made in Europa’ strategy for manufacturers with local production, based on incentives and short-chain CO2 emissions. For BYD, building up European presence becomes crucial. China remains BYD’s home turf, but its market share is shrinking.
BYD already tried to anticipate the European new normal by offering a plug-in hybrid version of the Atto 2, the DM-i, which undercuts the punitive tariffs.
It’s a rarity in this category. But these electrified powertrains, too, are now under debate in the European parliament over state subsidies. Clearly, local production is becoming increasingly important as international market frictions rise.
