China’s BYD Pauses Mexico Factory Plans Until After US Election
- BYD was scouting three locations, including Guadalajara area
- US political concerns also led Tesla to recently delay plans
Employees work on the assembly line at a BYD factory in Huai'an, China.
Photographer: AFP/Getty ImagesChina’s top electric-vehicle maker BYD Co. won’t announce a major plant investment in Mexico until at least after the US election, according to people familiar with the matter, as shifting American policy forces global businesses into wait-and-see mode.
BYD was scouting three locations for a car production facility in Mexico but has stopped actively looking for now, several of the people said, asking not to be identified discussing information that’s private.
The postponement is largely because BYD would prefer to wait and see the outcome of the race between former President Donald Trump and Vice President Kamala Harris in early November, the people said. They added that BYD’s paused factory plans may still be revived or could change, and no final decision has been made.
BYD said in a statement to Bloomberg that it “has not postponed a decision on a factory in Mexico.”
“We continue working to build a factory with the highest technological standards for the Mexican market, not for the United States market, nor for the export market,” the company said in a statement attributed to Executive Vice President Stella Li. “For BYD, the Mexican market is very relevant.”
One area that was under consideration was around the city of Guadalajara, one of the people said. That region has emerged over the past decade as a technology hub sometimes described as Mexico’s Silicon Valley. BYD sent a delegation to the area for a visit in March.
Li also visited Mexico City in February for the launch of the automaker’s Dolphin Mini model while senior management held court at a box sponsored by BYD at the Formula E Mexico City E-Prix in January.
Mexico has seen a surge in investment announcements from both Chinese and western auto manufacturers, including from Tesla Inc. But Tesla’s planned mega-factory was put on pause in July, pending the US election outcome. Republican nominee Trump, who Tesla Chief Executive Officer Elon Musk has endorsed, has repeatedly threatened to hit products made in Mexico with tariffs.
Tesla had announced plans to build the plant in the northern state of Nuevo Leon, with an estimated investment of $10 billion over several phases.
Read More: Musk Says Plans for Mexico Plant Will Depend on US Election
Mexico could be one of BYD’s key overseas production sites, along with plants that it’s currently building or already operating in Brazil, Hungary, Turkey and Thailand. Like other big Chinese automakers, Shenzhen-based BYD is increasingly seeking to localize production to avoid punitive tariffs that governments around the world are starting to levy on imported electric cars and plug-in hybrid vehicles from Asia’s biggest economy.
Read More: Chinese EV Makers Suffer Setback in Europe After Tariffs Start
While BYD has previously said any cars built in Mexico would be for local consumption, the prospect of exporting its affordable range of EVs to a huge auto market like the US would be tantalizing.
Read More: BYD Dominance Is Taking a Toll on Smaller Chinese EV Rivals
Mexico is seen as a strategically attractive landing point for foreign automakers given its proximity to America. It’s also part of a North American free trade agreement with the US and Canada.
The US already plans tariffs of 100% on Chinese EVs, an action President Joe Biden’s administration says will ensure the future of the auto industry will be made in America by American workers.
The Biden administration is also watching for any attempts by Chinese companies to export cars from Mexico into the US, and considering ways to block them if they seek to circumvent tariffs targeting EVs made in China, US Trade Representative Katherine Tai said in an interview in May.
BYD’s Li said in a Bloomberg News interview in late August that she planned to meet at some point with Mexico’s incoming President Claudia Sheinbaum, who takes office Oct. 1, and that the company was still weighing three locations for a factory in Mexico.
(Updates with BYD comment in fourth paragraph.)
