Chinese electric vehicle maker BYD Company (BYDDY  ) is reportedly set to sign an agreement with Turkey to build a $1 billion manufacturing plant in the country's west.

The new plant will enhance BYD's access to the European Union market, with which Turkey has a customs union agreement, reported Bloomberg.

Turkish officials confirmed that President Recep Tayyip Erdogan will announce the deal on Monday at a ceremony in Manisa province, where the factory will be located.

The new facility will provide BYD with easier entry to the EU market, which recently increased tariffs on Chinese EV imports to 48%.

Additionally, the plant will serve the domestic market, where EV sales represented 7.5% of total car sales last year in Turkey, a nation of nearly 90 million people.

On Friday, Turkey reduced tariffs on Chinese motor vehicle imports to stimulate investment, following discussions between Erdogan and China's President Xi Jinping at the Shanghai Cooperation Organization meeting in Kazakhstan, the report mentioned.

BYD, China's leading EV brand, inaugurated its first EV plant in Thailand on Thursday and is also constructing facilities in Brazil and potentially Mexico.

Besides a plant in Hungary, BYD has a minimal presence in Europe. The new factories highlight BYD's strategy to stay close to major markets and mitigate tariff threats.

BYD reported a 21% increase in EV sales in the second-quarter FY24. The company sold 426,039 EVs from April to June.

Price Action: BYDDY shares are trading higher by 0.92% at $59.50 at last check Friday.