BYD Mexico plans to produce electric cars only for the local market

MEXICO CITY.- Ray ZouPresident of BYD Mexicoreported that the plant that the company is considering opening in Mexico will be focused on serving the local market and does not have as its goal the export of vehicles to the United States or Canada.

In this way, the call made by the group Alliance for American Manufacturing in the United States to impose restrictions on imports of Chinese cars from Mexico or Canada, does not affect BYD’s plans to open a factory in Mexico, since its intention is to serve the national market, and not export to the American Union.

“Mexico is an important market for BYD. We have a high interest in local production, but the factory we are considering is only for Mexico, we have no intentions of exporting to the United States or Canada. Our intention is to focus on Mexico, invest in Mexico and produce a car only for Mexico,” Zou said during an interview.

BYD is evaluating where and when to open its plant, but some states are already mentioned as possible recipients of this investment, such as Nuevo León, San Luis Potosí or Querétaro.

“We will announce it when we have a conclusion. We do not yet have an exact opening date, but we are very advanced in the evaluation for local production,” he added.

Regarding the possible application of tariffs by the United States to vehicles imported from China, Zou reiterated that they are not concerned, because they have no intention of exporting to that country.

Meanwhile, BYD considers that it can sell between 40,000 and 50,000 vehicles in the Mexican market in 2024.

Regarding the restrictions on Chinese cars in the United States, the Mexican Association of the Automotive Industry (AMIA) commented that those sold in the country are not manufactured in Mexico but in the Asian country, and they are not exported to the American Union either.

And if a Chinese shipowner installs itself in Mexico, like BYD, there would not be a risk either, since to export to the US under the T-MEC rules they would have to comply with the regional content value of 75%.

“It is a very strong discussion in the United States. We believe that it is an uninformed discussion, in terms of the fact that they do not have real data about what is happening and it is more of an electoral political discourse,” he explained. Odracir Barquerageneral director of AMIA.

“We have a free trade agreement between Mexico, the United States and Canada where not only the rules of origin are established, which are the highest of any treaty in the world, at 75%, but also labor content requirements and certain requirements. on steel and aluminum purchases,” said the AMIA leader.

He highlighted that the T-MEC is the legal instrument on which automotive trade takes place between the three countries, and as long as all the requirements set forth in the treaty are met, none of the three countries would have any reason to reject the production of one of the other two.

Trump, a risk

The Alliance for American Manufacturing requested that tariffs be imposed on cars imported from China, including electric and gasoline cars, through Section 301 imposed in 2018 in the United States.

It also urges United States trade negotiators to exclude from the benefits of the USMCA any automotive company that has any participation from the Chinese government or its affiliated companies, which would install plants in Mexico or Canada to avoid US tariffs.

Currently, Chinese cars pay a tariff of 27% to enter the American Union market.

Recently, Republican Senator Josh Hawleypresented an initiative to impose 125% tariffs on vehicles manufactured in China that try to enter their country through Mexico.

Jorge Molinaan international trade consultant, said that Americans can place tariffs on Chinese cars, since it is a power of Congress, through a law, and the president can approve or veto it.

But under that scenario, China could resort to the dispute settlement mechanism of the World Trade Organization (OMC).

In case of hardening the T-MEC rules During the review of the treaty in 2026, an additional lock may be included in the rules of origin to exclude Chinese shipowners, although this “would be unprecedented in any treaty.”

“Yes, they could do something, even more so if Trump wins or if the Republicans continue to control one of the two chambers of Congress,” Molina warned.