Reuters reports that Chinese electric auto maker BYD is evaluating locations in Mexico for a production facility. The report cites Americas head Stella Li as stating that the plant will be built in central Mexico and will take two to three years to complete. It will have a capacity of 150,000 vehicles per year, according to Li, as reported in the Detroit Free Press. In an interview with WardsAuto, Jorge Vallejo, BYD’s general director in Mexico, stated in part: “These days our focus is basically on the Mexican market. We expect to commercialize 50,000 vehicles this year and we want to more than double those sales next year.” On May 14, BYD launched its first pickup truck—the mid-to-large size BYD Shark—in Mexico, according to CleanTechnica.¹

According to Asia Financial, BYD overtook Musk-led Tesla in sales for the first time ever in Q4–2023, delivering 526,409 vehicles in the October-to-December period and exceeding Tesla’s deliveries of 484,507 EVs. Reuters reports that during a January 2024 post-earning call with analysts, Elon Musk said that Chinese car companies were the “most competitive”; that they “will have significant success outside of China, depending on what kind of tariffs or trade barriers are established”; that “[i]f there are no trade barriers established, they will pretty much demolish most other car companies in the world,”; and that “[t]hey’re extremely good.”

On May 14, The White House announced that the tariff rate on electric vehicles under Section 301 of the Trade Act of 1974 will increase from 25 percent to 100 percent in 2024, stating that “[w]ith extensive subsidies and non-market practices leading to substantial risks of overcapacity, China’s exports of EVs grew by 70 percent from 2022 to 2023—jeopardizing productive investments elsewhere. A 100 percent tariff rate on EVs will protect American manufacturers from China’s unfair trade practices.” CBS News reports that the administration “is trying to keep the U.S. from emulating Europe, where Chinese EVs quickly came to account for about 20 percent of the market share, but is not considering banning Chinese-made EVs.”

Mexico’s industrial real estate market is thriving, according to an analysis published in Thornburg, which states that if just three percent of China’s industrial gross leasable area (GLA) were to shift to Mexico, the Mexican industrial market footprint would double. According to TC Latin America Partners, industrial inventory in Mexico has doubled since 2008 with vacancies hovering at just seven percent over the last decade. Commercial Property Executive reports (citing data from Fitch Ratings) that Mexico’s industrial market attracted more than $18.6 billion in foreign investment in the first quarter of 2023 alone, a 48 percent increase year-over-year.

Mexico is the world’s seventh largest passenger vehicle manufacturer, producing 3.5 million vehicles annually, according to the International Trade Administration, which further states that 88 percent of vehicles produced in Mexico are exported, with 76 percent destined for the United States. The Mexican Automotive Industry Association (AMIA) estimates that Mexico will become the fifth largest global vehicle producer by 2025, according to Prodensa.

1. Mexico Business News reports that in addition to a production facility in Mexico, BYD intends to invest in a new industrial complex in northeastern Brazil, which is set to be built on land previously occupied by a Ford plant that ceased operations in 2021. That plant is estimated to cost 3 billion reais (US$620 million). ↩︎

Last Updated on May 21, 2024 by Ramin Seddiq