BYD “is considering” building a new production plant in Mexico as an export hub to the US market, Nikkei reported on Wednesday, citing the Chinese electric vehicle giant’s local head.
BYD eyes new Mexico factory for US sales
BYD reportedly initiated a feasibility study for its plans to invest in a new electric vehicle factory in Mexico. It has also started talking with Mexican government officials to negotiate potential project locations and other matters.
BYD has shown great interest in Latin America, Europe, and other parts of Asia to boost its production capacity since it started to get near Tesla’s sales record. In 2023, it managed to beat Tesla with over 3 million electric car sales for the first time in history.
BYD Mexico Country Manager Zhou Zou disclosed that Nuevo Leon in northern Mexico and the Yucatan Peninsula are among the strongest candidates for the investment.
The move is apparently part of the Chinese electric automaker’s global expansion strategy to advance as a dominant player in the electric vehicle industry.
“Overseas production is indispensable for an international brand.”
Zhou Zou, BYD Mexico Country Manager
Why Mexico?
BYD has already penetrated Mexico with some of its electric vehicle models. Therefore, it would be wise for the company to build the EVs there too.
It would significantly aid BYD in further solidifying its presence in Mexico and Latin America. More importantly, it will enable the company to have its entry point into the US market.
In contrast, several automakers in the US are struggling to progress in the EV market, prompting them to delay or cancel their electrification plans.
Potential government benefits
Notably, the US-Mexico-Canada Agreement mandates that at least 75% of electric vehicle components undergo production in one of the three regions to secure tariff benefits.
The US Inflation Reduction Act also demands automakers to assemble the EVs in the US along with stringent battery sourcing requirements to benefit from up to $7,500 tax credit.
Therefore, BYD could enjoy lower export costs into the US with the development of the new Mexican factory. It will also add to BYD’s growing production presence beyond China, which currently consists of Brazil, Hungary, and Thailand.
The planned new factory in Mexico will give BYD a theoretical base of entry into the American market, further threatening Tesla’s leading position in its home country.
