While in the United States for the United Nations General Assembly, Erdogan encountered Tesla and SpaceX CEO Elon Musk in New York. Known for its prowess in production, Turkey is the potential site of Tesla's seventh electric vehicle factory.
President Erdogan sought to draw Elon Musk to Turkey, according to reports from the country's state media on Monday. During a gathering in New York on Sunday with the Tesla and SpaceX CEO during Erdogan's visit to the U.S. for the United Nations General Assembly, the Turkish leader invited Musk to set up his seventh factory in Turkey. Moreover, Erdogan proposed a collaboration with Musk's aerospace company SpaceX and Turkey's space program, and extended an invitation to Teknofest, the nation's biggest aviation, aerospace, and technology festival in late September and the end of October. Musk indicated that there were Turkish suppliers already working with Tesla, and that Turkey is a prominent contender for his next facility, as relayed by Anadolu. CNBC has made contact with the Turkish communications directorate for the full statement.
Tesla currently has six facilities and is in the process of building a seventh in Mexico. This past May, Musk voiced that he would likely pick a location for another plant before the end of the year. Reports have it that he had conversations with Indian government administrators concerning the construction of a factory that specializes in inexpensive electric vehicles. To a CNBC query for a statement, Tesla did not give an answer. The company's stock has gone up 123% since the start of the year. Musk and Erdogan are said to have discussed working together on artificial intelligence and Starlink, which is SpaceX's version of satellite internet. Musk expressed curiosity in getting approval from Turkey's government to have Starlink available in the country of 85 million people.
In recent years, Turkey has established itself as a prominent manufacturing center along the juncture of Asia and Europe. Official figures from the U.S. Department of Commerce demonstrate that manufacturing's contribution to the country's GDP has risen from 12% to 19% between 2012 and 2022, and the government plans to drive that up to 21% by the end of 2021 in accordance with its 2023 Industry and Technology Strategy. This strategy features state aid to entrepreneurs, reinforced protection for intellectual property, and a hefty investment in STEM education and technology startups. Currently, out of Turkey's exports in the manufacturing sector, 36% are classed as medium-tech items and 3% as high-tech items. With a view to 2023, Turkey anticipates these respective figures to move to 44% and 6%.
In recent years, Turkey has made a name for itself in defense technology. In 2022, its arms exports broke the record at $4.4 billion – higher than some European nations' annual defense budgets. Looking ahead, their government intends to raise that number to $6 billion in 2023.Turkey's Presidency of Defense Industries reported that the total defense industry value last year was approximately $10 billion, with 2000 companies in the sector. The Turkish-made Bayraktar TB2 drone, renowned for its use by Ukrainian forces against Russian invaders, has gained attention worldwide. According to Turkish press, Erdogan noted the drone's success during his conversation with Musk, to which Musk said he was familiar with its international acclaim.
Turkey is estimated to invest $1.0-$1.5 billion yearly to introduce industrial 4.0 solutions into production. Despite these measures, the Turkish economy has been declining for a few years due to dwindling foreign currency reserves and President Erdogan's refusal to increase interest rates under rapid development, resulting in a depreciated currency and inflation skyrocketing. The country's central bank has tried to make corrections recently by gradually increasing interest rates, but the lira's price has not improved yet. It is currently 30% cheaper to the dollar, and it has lost 78% of its value compared to the dollar in the past five years. President Erdogan is attempting to revive the country's finances by engaging in conversations with CEOs such as Musk and entering trade and investment contracts with rich Arab states of the Gulf.
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