Electric Vehicle Giant BYD Plans Factory in Mexico

Chinese electric vehicle major BYD is considering opening a factory in Mexico, the Wall Street Journal has reported.

Citing unnamed sources, the publication said that BYD was scouting for suitable locations. The factory would manufacture cars for the U.S. market, the sources also said.

Chinese EV makers are the top sellers globally after Tesla. That’s because they sell on their local market and that market is huge. But now it is reaching saturation point so the companies are beginning to look abroad. BYD, by the way, dethroned Tesla as the largest EV sells in the world in the final quarter of 2023.

European carmakers are already spooked by Chinese EV manufacturers’ plans to enter the European market and start offering same-quality, lower-price cars. To that end, the EU launched an investigation into subsidy practices in the EV space in China – while continuing to offer subsidies to EV buyers at home.

U.S. carmakers could sleep easily until now, safe in the knowledge that tense political relations between Washington and Beijing were hardly conducive to a Chinese EV invasion. They probably forgot about Mexico.

The United States has a free-trade agreement with its southern neighbors. This means that cars manufactured in Mexico cannot be subject to tariffs if they are to be exported north of the border. And the car industry is beginning to worry, even though the WSJ sources noted that BYD had yet to make a final decision on the Mexico factory.

The report also noted that Chinese companies active in the EV industry had been opening factories in Mexico in recent years or expanding already existing manufacturing capacity. The expansion is quite likely a response to the Biden administration’s ambitious electrification goals for the transport industry, with plans for 67% of all cars sold in 2032 to be EVs.

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