China’s BYD Plans Expansion Into Mexico, Rules Out U.S.

MEXICO CITY – Chinese automaker BYD is claiming the key focus of its planned plant in Mexico will be the domestic market, rather than exports to the U.S. and Canada.

Speaking to WardsAuto, Jorge Vallejo, BYD’s general director in Mexico, says: “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. We are talking about some 150,000 EVs; therefore, the Mexican market is our priority and that should be our focus. We are 100% focused on the Mexican market. Nothing on that (North American) front.”

His comments come as the company has been reviewing locations for a first plant in Mexico, with executives telling Mexican media in April this would be in central Mexico https://mexico-now.com/byd-plans-to-install-its-new-plant-in-central-mexico/, following reports in March that a factory would be built near the Pacific coast, in Jalisco state. https://cnevpost.com/2024/03/11/byd-considers-ev-plant-in-mexico-jalisco-report/ 

 “At a national level, we are considering a lot of states that have opened their doors to us,” Vallejo says. “In-depth analysis has been carried out to know infrastructure availability, logistics, ports, business environment, training, workforce availability and development.”  

A BYD Mexico spokesperson says a construction commencement date will be announced “in the following months.”

Thomas Karig, an automotive consultant based in Puebla, Mexico, and a former corporate relations and compliance officer vice president at Volkswagen, says BYD’s move to Mexico makes sense because China-assembled vehicles carry a 27.5% tariff on Chinese auto exports imposed by ex-President Donald Trump and maintained by the Biden Admin. 

But once BYD opens an assembly plant in Mexico, its vehicles would be deemed made in Mexico and attract a much lower most-favored-nation duty of 2.5%. And should BYD build up a Mexican supply chain (and even source parts from the U.S. and Canada), then under the US-Mexico-Canada Agreement’s rules of origin, its BEVs could enter the U.S. duty-free.  

“In an initial stage of car assembly in Mexico, most of the car’s components would have to come from China. These cars would not comply with USMCA’s rules of origin,” says Karig. 

Regarding BYD’s claims to be uninterested in exporting to the U.S. and Canada, Karig comments: “Of course they are being cautious. It is a really politicized topic in the United States and it has nothing to do with Mexico. It is a China-U.S. problem.” 

The possibility of Chinese automakers entering the U.S. market could alarm U.S. manufacturers such as Tesla, which was outsold globally for the first time ever in Q4 2024 – by BYD. 

The BYD spokesperson says the company intends to launch six to eight new battery-electric vehicles and plug-in hybrids in Mexico, although the company notes the difficulty of working with the country’s small car-dealership network.

BYD cars await shipment from Suzhou Port in eastern China.

“Building new car dealerships requires time to calculate, design and have the renders approved, and…the sales volume has not taken off as we would have liked it to,” says Vallejo. “We do expect to close 2024 with 50 dealerships countrywide, though. We will close April with 20, and we still have a way to go but we will get there. They will include car service centers and maintenance facilities.” 

Another obstacle lies in changing the public perception of BEVs as urban-only vehicles. 

With that purpose in mind, BYD is expanding its partnerships to implement “EV corridors” with recharging points to connect Mexican cities that can maximize their range. 

“These vehicles can also be used for traveling from one city to another. We must work towards guaranteeing up to 60% savings compared to ICEs, as well as ensuring the quality and safety of our models,” Vallejo says. “The creation of electric corridors is a must-have that many companies have started to work towards to offer charging levels from 20 minutes to two hours.” 

The latest partnership announced by BYD includes a collaboration agreement with Mexican cleantech group VEMO to strengthen the latter’s charging network in Mexico by adding technology and charging stations with (Chinese-specification) GB/T charging plugs to reduce charging waiting periods. 

“This agreement will also allow us to keep exploring opportunities to establish EV corridors at a national level and between cities like Mexico City, Guadalajara and Monterrey,” just 150 miles (242 km) from the border with Texas. “We are in talks with authorities from the (border) state of Nuevo León, who are very open to discussing the topic,” says Vallejo. 

Along with the production plant, BYD intends to build a BEV innovation lab called the Vision Center developing the “best mechanisms of production and quality.” The plant also will include a battery production facility. “BYD is not only a company that focuses on developing batteries…but (the plant) will most likely have all the necessary elements to supply the Mexican market, which we are focused on,” the spokesperson says.