AUTONEWS

China postpones BYD factory in Mexico - it is more advantageous to export thousands of cars subsidized by the Chinese state, as is the case in Brazil

The Commerce Ministry believes that Mexico would have unlimited access to BYD technologies and that its proximity to the United States could mean that Americans could access these systems

China is delaying the approval of a new BYD factory in Mexico, for fear that the technology developed by the company could end up in the hands of the United States, reported this Wednesday the Financial Times.

According to sources cited by the British newspaper, who asked not to be identified, the Chinese Commerce Ministry believes that Mexico would have unlimited access to BYD's advanced systems and technologies and that the country's proximity to the United States could mean that Americans could also access these technologies.

BYD announced plans in 2023 to build a factory in Mexico, where it would produce about 150,000 vehicles per year and create 10,000 jobs. The Shenzhen-based company's plan also included manufacturing cars in Indonesia, Brazil and Hungary.

However, Chinese carmakers need trade approval to produce vehicles abroad, and Beijing is giving preference to countries that are part of its international infrastructure development initiative known as the “Belt and Road”. 

According to the newspaper, Donald Trump’s return to the White House has caused Mexico to lose some of its enthusiasm for the BYD project, making maintaining relations with its northern neighbour a higher priority in the face of the threat of tariffs on cross-border trade. 

After Trump’s team accused Mexico of being a “back door” for Chinese products to enter the United States without paying the applicable taxes, the Mexican government announced tariffs on textiles from the Asian country and investigations into Chinese steel and aluminium for alleged unfair competition.

 “The new Mexican government has adopted a hostile attitude towards Chinese companies, which makes the situation even more difficult for BYD”, explained one of the sources cited by the Financial Times. For Rhodium analyst Gregor Sebastian, “the Mexican government would obviously like to get some Chinese investment, but its trade relationship with the United States is much more important.”

In a recent interview with the FT, BYD executive vice-president Stella Li said the company “hasn’t decided yet” what will happen with its plan to open a factory in Mexico: “Every day there’s different news. We have to keep looking at how to improve and satisfy, to get the best result for everyone.”

However, in February, Li had said that BYD would choose the location of the factory before the end of the year.

In 2024, the electric carmaker sold more than 40,000 vehicles in Mexico, and revealed that the goal for this year is to double sales volume and open 30 new dealerships in the country.

Change of plans...Although the Financial Times indicates fears of industrial espionage or technology leaking to the US, there may be another reason on the table: the shielding that the Donald Trump administration is putting in place against Chinese cars. A measure that was implemented by the Joe Biden administration and deepened by the current US President.

In 2023, the Chinese manufacturer had announced plans to build a production unit in Mexico. An annual production capacity of 150,000 vehicles and the creation of 10,000 new jobs were expected. In addition to this project, the Shenzhen company also has plans to expand to Indonesia, Brazil and, in Europe, to Hungary, Turkey and, possibly, Germany.

Since the construction of all overseas factories by Chinese manufacturers requires government approval, Beijing is prioritizing investments in countries that are part of its initiative known as the “Belt and Road”. And this ends up leaving Mexico in the background.

Donald Trump's return to the White House has heightened trade tensions between the US and China, leading "the Mexican government to adopt a more restrictive attitude towards potential investments by Chinese companies, such as BYD", says a source cited by the Financial Times.

Mundoquatrorodas