BYD, a leading Chinese electric vehicle (EV) manufacturer, is exploring the possibility of establishing a production facility in Mexico, aiming to create an export hub targeting the U.S. market, according to Zhou Zou, the company’s country manager for Mexico. This move is part of BYD’s strategy to bolster its international presence, given that its sales outside China only represented 8% of its total sales last year, despite leading global EV sales in the fourth quarter of 2023, surpassing Tesla.
The company’s global expansion efforts include the construction of new manufacturing plants outside China, with facilities opening in Thailand and plans announced for a plant in Hungary within the next three years. In Latin America, BYD has committed to investing 3 billion reals ($605 million) to build a plant in Brazil. The feasibility study for the Mexican plant is currently underway, with negotiations ongoing with both national and local government officials regarding the location and terms for the new facility. Although no specific location has been confirmed, potential areas include Nuevo Leon in the north and the Bajio region in central Mexico, with the Yucatan Peninsula also being considered.
Establishing a manufacturing capacity in Mexico offers several advantages, notably lower export costs to the U.S., benefiting from the U.S.-Mexico-Canada Agreement’s manufacturing quotas and facing less impact from rising labor costs in the U.S. compared to Mexico. Furthermore, U.S. tax incentives for EV purchases, which require North American assembly and specific battery sourcing conditions, underscore the strategic importance of having a manufacturing presence in the region for Chinese EV manufacturers.
Despite a slowdown in the global EV market and uncertainties surrounding U.S. political support for EVs, the demand for electric and plug-in hybrid vehicles continues to grow worldwide. The Mexican market, in particular, has seen a significant increase in vehicle sales, with Chinese vehicles marking a substantial presence. This growth, coupled with investments from other major EV makers such as Tesla, Kia, BMW, and Stellantis in Mexico, positions the country as an emerging manufacturing hub for the EV industry. Chinese investments in Mexico have also seen a notable increase, reflecting a strong interest in the Mexican market for nearshoring investments.
