AUTONEWS

Mexico bars the powerful BYD, under pressure from the Americans

Attracting investment from a global developer to Mexico was (and continues to be) an excellent deal for the local government, as it not only creates above-average paid jobs, but also generates wealth through taxes, precisely what type of proposals that Mexicans need like bread in their mouths. However, the reality is that due to the North American free trade agreement, which unites the USA, Canada and Mexico itself, vehicles manufactured in any of these countries can be exported to the rest without paying taxes. And it was precisely this that triggered warnings from the American neighbor.

According to Reuters, Mexico held talks in January with officials from BYD, the largest Chinese car and battery manufacturer, where it had the opportunity to inform them that it would not only stop providing incentives to Chinese manufacturers who intend to set up in country and produce its vehicles there, as well as suspending future meetings with any Chinese manufacturer on the same matter.

It should be remembered that General Motors, Ford and Chrysler — the three North American giants — have had factories in Mexican territory since 1930, with Volkswagen and Nissan opening their production lines in the 1960s, with Tesla having already announced the construction of a Gigafactory in the country, so that it can also take advantage of the advantages of the commercial agreement and lower labor costs.

According to the North American press, what made Mexicans change their opinion regarding investment by Chinese brands was pressure from North Americans, worried about the possibility of larger Chinese car manufacturers setting up shop in their neighbor to the South. , to benefit from lower costs and guarantee entry into your market without paying fees. Currently, all Chinese cars arriving in the USA pay 27.5% in import taxes, with the American tax authorities intending to increase this amount even further (proposed by Senator Marco Rubio). Although this value may seem high, it is less limiting than the conditions imposed by China on Western manufacturers who have intended to sell their vehicles in that country for years.

At issue is not the sale of Chinese vehicles in Mexico, as there are currently around 20 manufacturers from that Asian country selling their cars there, but rather the ability to export them freely to the USA and Canada, substantially larger markets with greater purchasing power. However, if the Mexican federal government announced this anti-Chinese decision, manufacturers can still apply for smaller incentives from different states, somewhat similar to what happened with Tesla, which received 153 million from the state of Nuevo Leon to install the production line there from which the future vehicle, usually called Model 2, will emerge.

Autonews