China’s BYD is reportedly prepared to set up a new production facility in Mexico with the alleged plan to use the locale as an export hub for the United States.
Mexico has long been a convenient venue for automakers vying to sell products within the Western Hemisphere without having to pay the kind of salaries commensurate with higher living standards. American brands love sending jobs to Mexico, as does every other company interested in moving high volume models through North and South America. With BYD having previously voiced its global aspirations, setting up shop in El Águila Real seems like an obvious play.
Despite frequently marketing itself as a purveyor of all-electric luxury vehicles, BYD actually has a slew of affordable EVs targeting the mass market. It also builds electrified buses, trucks, utility vans, construction vehicles, and mining equipment. It likewise produces plug-in hybrids, with the extremely affordable Qin Plus sedan being its most-popular product. That particular model starts at the Chinese equivalent of $14,000 on the domestic market.
According to a report by Japan’s Nikkei, BYD has already launched a feasibility study for the Mexican plant and is in the process of negotiating with officials on terms and where the facility should be built. While nothing has been decided as of yet, there are rumors that it’s vying for space in Nuevo Leon or perhaps the Bajío region in Central Mexico. However, space in the Yucatan Peninsula was also said to be under consideration.
Mexico has become a major automotive exporter, with some of the world’s largest brands having set up shop there. But it’s also a gateway into the United States, as many of the financial benefits associated with the United States-Mexico-Canada Agreement (USMCA) and regional EV subsidies are both tied to localized manufacturing.
BYD has likewise set aside the equivalent of $600 million USD to build a new factory in Brazil to better tackle South America.
“Overseas production is indispensable for an international brand,” said Zhou Zou, country manager of BYD Mexico. “Mexico is a key market with vast potential, Zou added, expressing eagerness for a plant in the country.”
From Nikkei:
The global electric vehicle market slowed last year, and former U.S. President Donald Trump, who is less than enthusiastic about the spread of EVs, could get re-elected in November.
But EVs and plug-in hybrids are growing in every market worldwide, Zou said, calling worries unfounded.
Overall, 1.36 million vehicles were sold in Mexico last year, up 24 [percent] from 2022. Of those, Chinese vehicles accounted for more than 120,000 , a gain of 60 [percent], business newspaper El Financiero reports.
SAIC Motor affiliate MG, along with Chery Automobile and JAC Group, are three Chinese brands that have a head start in Mexico.
Mexico is on the verge of becoming a key manufacturing hub for major EV makers. Tesla plans to build a gigafactory in Nuevo Leon, prompting Chinese suppliers to announce about $1 billion in parallel investments. CEO Elon Musk has indicated the new Mexican factory will be a mass production hub for low-cost EVs.
South Korea’s Kia has said it will manufacture EVs in Mexico. Last year, BMW and Stellantis said they will manufacture EVs in Mexico.
Nikkei noted that BYD did extremely well in the fourth quarter of 2023, beating Tesla for the first time ever in terms of global EV sales volume. However, the Chinese firm’s sales are isolated primarily to the domestic market. One of the main reasons the Chinese automotive market has become so dominant is due to the size of the nation and the fact that living standards have improved over the last several decades. But the end goal is to become globally recognized brands akin to Volkswagen or Toyota.
In terms of sales, BYD doesn’t have the largest footprint in the Americas. While Mexico has purchased the company’s all-electric work vehicles and buses for a few years, BYD-branded vehicles didn’t start cropping up within the country until 2023. Brazil followed a similar trajectory, with BYD also having plans to sell buses to Columbia. Like everyone else, Chinese brands appear to be investing into Mexico in order to assure global relevance.
[Image: BYD Auto]
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