Facing rising geopolitical tensions and uncertainty surrounding US trade policy under President Donald J. Trump, Chinese EV maker BYD has put plans for a large-scale factory in Mexico on hold.
Beijing fears technology could leak
Previously, in March 2024, Chinese officials reportedly delayed approval for electric vehicle giant BYD's plans to build a factory in Mexico, amid concerns that the company's core technologies could be exposed to US competitors through cross-border supply chains.
According to The Financial Times, Beijing is worried that locating a plant in Mexico, which has close trade ties with the United States, could inadvertently give American rivals access to proprietary Chinese EV technology. Instead, Chinese authorities are encouraging BYD to prioritize factory investments in countries aligned with China's Belt and Road Initiative.
Chinese automakers seeking to manufacture vehicles abroad must obtain approval from China's Ministry of Commerce—authorization that, in BYD's case, has yet to be granted.
According to people familiar with the matter, officials at the Ministry of Commerce and other government agencies are concerned that building a plant in Mexico could allow unrestricted access to BYD's proprietary technologies, potentially opening the door to US acquisition or surveillance. As a result, Beijing is prioritizing investment in countries that participate in its Belt and Road Initiative instead.
Mexico's plans have been put on pause
BYD first announced its intentions to build a plant in Mexico in 2023, with an expected annual output of 150,000 vehicles and the potential to create 10,000 jobs. The company also has plans to expand production in Brazil, Hungary, and Indonesia.
Stella Li, Executive Vice President of BYD, said in an interview on July 1, 2024, that while the company remains interested in expanding its footprint in the Americas, it currently has no timeline for new investments. The comments came during the opening ceremony of BYD's new facility in the Brazilian state of Bahia—its first factory outside of Asia.
"Geopolitical issues have had a significant impact on the automotive industry," Li told Bloomberg News. "Everyone is rethinking their international strategies. BYD prefers to wait until the situation becomes clearer before making any decisions."
In a September 2024 report, Bloomberg noted that BYD had identified three potential sites for a plant in Mexico but opted to wait for the outcome of the US presidential election before finalizing its plans. Since then, the company has reportedly ceased all site selection activity in the country.
Mexican President Claudia Sheinbaum said in March 2024 that BYD had not yet submitted a formal investment proposal.
Li emphasized that BYD still intends to grow its global manufacturing base but acknowledged that the timeline remains uncertain amid shifting trade dynamics.
BYD's new factory in Camaçari, Brazil, is expected to begin operations within two months and will initially assemble semi-finished vehicles shipped from China. Once fully operational, the facility will have an annual production capacity of 150,000 electric vehicles, with plans to double that to 300,000 units within two years.
Article edited by Jerry Chen
