BYD may not built factory in Mexico after all
As the Financial Times reports, citing two people familiar with the matter, there are other reasons why Beijing could be against a Chinese carmaker setting up production in Mexico. On a side note: BYD needs permission from the Chinese government to do so.
One aspect is that China prefers projects set up in countries along its Belt and Road route. However, “the commerce ministry’s biggest concern is Mexico’s proximity to the US,” one of the people told the FT.
The US administration has accused Mexico of being a back door for goods from China amid the growing trade dispute between the US and both countries. Washington imposed additional tariffs on goods from China and also from Mexico. However, in the case of the latter, the automotive industry is exempt – at least for now. And as Mexico is trying to stay in US President Trump’s good graces, China fears that too much information concerning its own carmakers could leak across the border.
“Mexico’s new government has taken a hostile attitude towards Chinese companies, making the situation even more challenging for BYD,” the second insider told the FT. It would not be the first time that Mexico has come under pressure from the US concerning China. About a year ago, the country scrapped incentives for Chinese carmakers building factories there.
Nevertheless, BYD has been known to increasingly focus on Mexico, aiming to sell 100,000 electric cars there this year – compared to a target of 50,000 EVs for 2024. Plans for a BYD production facility first emerged in early 2024, with BYD saying that it would create around 10,000 jobs and produce some 150,000 vehicles there per year.
It is still not clear whether or not BYD even intends to go through with the plans – provided it gets the green light from Beijing. According to Mexico’s President Claudia Sheinbaum, there was still no firm proposal from the carmaker. BYD’s executive Vice President Stella Li said earlier that the carmaker had “not decided [on] the Mexico facility yet.” Initially, it wanted to announce the factory’s location by the end of 2024.
The US, Canada, and Mexico form the NAFTA free trade region, meaning BYD could import its cars built in Mexico into the US and Canada duty-free. At least theoretically, as tariffs imposed by US President Trump could change that narrative. Under the previous administration, the US raised customs duties on electric vehicles from China from 25 per cent to 100 per cent, and Canada followed suit. In June 2024, BYD said it would not come to the US as “it is very complicated.”
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