The Chinese electric vehicle (EV) manufacturer Build Your Dreams (BYD) announced on Tuesday the cancellation of its plan to build a manufacturing plant in Mexico, following months of uncertainty.

BYD cited a lack of clarity on the United States President Donald Trump’s tariff plans for the automotive sector, as well as geopolitical tensions, for the decision to rethink its investment strategy.

BYD rolled out its first vehicle from its Brazilian plant yesterday. It took the Chinese carmaker only 15 months to build the passenger car factory as part of a BRL5.5 billion (USD1 billion) project in Camacari, with annual output expected to reach 150,000 NEVs while creating… pic.twitter.com/TRSLQ3x3Dj

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BYD had announced in 2023 plans to develop a plant in Mexico, where it would produce approximately 150,000 vehicles per year and generate 10,000 jobs.

The facility was expected to serve the Mexican and Latin American markets, as well as eventually the U.S.

The company remains interested in expanding in the Americas but has no timeline to make a new investment, BYD’s Executive Vice President Stella Li said in an interview with Bloomberg on Tuesday in Brazil’s Bahia state, where the firm is opening its first factory outside of Asia. 

“Geopolitical issues have a big impact on the automotive industry,” Li said in the interview. “Now, everybody is rethinking their strategy in other countries. We want to wait for more clarity before making our decision.” 

BYD was expected to announce the location of its planned Mexico plant by the end of 2024. However, in March, President Claudia Sheinbaum said that BYD had not submitted a formal offer to invest in Mexico.

At that time, the Financial Times (FT) reported that China’s Ministry of Commerce had not approved BYD’s investment in Mexico for fears that the company’s smart car technology could be accessed by the United States. 

The FT reported that its two sources thought China was giving preference to projects in countries that are part of China’s global infrastructure development strategy — the Belt and Road initiative. They also cited “shifting geopolitical dynamics” for the lack of approval. 

In early November last year, BYD said it would follow through with plans to build its first plant in Mexico, no matter the outcome of the U.S. election. That announcement initially made the investment appear more likely to happen, but that hope was dashed with Tuesday’s announcement. 

With reports from El Economista, Bloomberg and The Financial Times