BYD halts Mexico factory plans amid Trump’s trade tensions

BYD, China’s largest electric vehicle manufacturer, has paused its plans to build a major car plant in Mexico as geopolitical tensions and trade policy uncertainty under US President Donald Trump continue to reverberate. The decision comes despite BYD’s ambition to expand its footprint in the Americas and follows months of strategic reassessment amid growing trade barriers and regulatory risks.

“Geopolitical issues have a big impact on the automotive industry,” Bloomberg quotes Stella Li, Executive Vice President of BYD, as saying in an interview in Bahia, Brazil, where the company opened its first factory outside Asia. “Now everybody is rethinking their strategy in other countries. We want to wait for more clarity before making our decision.”

BYD had been actively scouting three locations in Mexico to establish a new production hub until last year. In March, it was reported that Beijing had not given the carmaker the green light for a factory there (which it needs), amid concerns that too much know-how could leak across the border into the US.

The strategic pause comes as Trump announces sweeping tariffs on dozens of US trading partners, including fresh taxes on certain imported goods such as vehicles. This has disrupted supply chain planning across the automotive sector. US carmakers have warned that the tariffs could impose billions in additional costs. Even Audi is said to consider setting up production in the US. The large electric Q8 e-tron SUV is supposed to roll off the production line in Mexico. However, due to tariffs, the German carmaker is looking into manufacturing it, and other vehicles, in the US.

Although BYD says that it remains committed to global expansion, particularly in the Americas, the timing for its next major investment remains uncertain. Li underscored that while BYD continues to evaluate production growth opportunities, the prevailing geopolitical climate complicates strategic decisions. “We want to wait for more clarity before making our decision,” she reiterated.

Production line in Brasil starts rolling

Meanwhile, BYD has officially begun production at its new passenger vehicle plant in Camacari, Brazil, strengthening its position in the South American electric mobility market. The factory, launched on 1 July, is BYD’s first passenger car plant in the country and begins operations with the production of the Dolphin Mini, known internationally as the Seagull.

The Camacari facility represents an investment of 5.5 billion Brazilian reais ($1 billion) and has an initial annual production capacity of 150,000 new energy vehicles. Additional models, including the Song Pro and Chaser 05, will follow on the local production lines. The annual capacity is said to be 150,000 units, which can later be doubled to 300,000 vehicles.

The factory, first announced in 2023, consists of three production facilities on a former Ford industrial site in the Brazilian state of Bahia – one for electric and hybrid cars, one for chassis for electric buses and trucks, and a third to process lithium and iron phosphate for the international market. The carmaker reportedly secured the rights for lithium mining in Brazil in 2023.

BYD entered the Brazilian passenger vehicle market in 2021 and has since accumulated sales of more than 130,000 units. Chinese media reports that, in the first quarter of 2025 alone, BYD sold over 20,000 units, positioning it as the NEV sales leader in Brazil. In May, the company reached fourth place in Brazil’s overall automotive retail rankings, securing a market share of 9.7 per cent.

The plants in Bahia are not BYD’s first production facilities in Brazil. The company already manufactures electric bus chassis in Campinas in the Brazilian state of São Paulo and operates a factory for battery modules for lithium iron phosphate batteries in Manaus, the capital of the Brazilian state of Amazonas. BYD is also reportedly planning to build a battery materials factory in Chile.

bloomberg.com (Mexico), cnevpost.com, carnewschina.com, byd.com (Brasil)