Chinese electric vehicle maker BYD confirms plans to manufacture in Mexico

Chinese electric vehicle (EV) manufacturer BYD is forging ahead with its plans in Mexico: the company has now confirmed it will open a plant here and on Wednesday launched a new EV in the Mexican market as it seeks to grow its sales outside China.

BYD Americas CEO Stella Li told Reuters on Wednesday that the Shenzhen-based company is looking for a suitable location for its Mexico plant, which she said will make 150,000 vehicles per year for the Mexican market.

Her confirmation of BYD’s decision to establish a factory in Mexico comes two weeks after BYD México country manager Zhou Zou said the company was considering the idea.

Li, one of Time magazine’s “100 most influential climate leaders in business for 2023,” said that BYD anticipates deciding on a location for its Mexico factory by the end of the year.

While she didn’t say when the plant might open or how much BYD planned to invest in the new facility, Li did reveal that the company is looking for sites in central and southern Mexico, rather than in the north of the country.

Jorge Vallejo, the general director of BYD México, told the news site Mexico Industry that the company is looking at parts of the country where there is already an established automotive sector. The automaker is seeking the location with the “best conditions,” taking things such as local infrastructure and the availability of labor into account, he said.

Li told Reuters that BYD’s Mexico plant will only make vehicles for the Mexican market — in which Chinese car sales surged last year — and that getting them to consumers would be more costly if production was in the north of Mexico.

“Our plan is to build the facility for the Mexican market, not for the export market,” she said.

United States officials and U.S. automakers are concerned about the entry to the U.S. of comparatively cheap Chinese vehicles — including ones made in Mexico — due to the threat they pose to the American automotive industry and its workers.

Asked by Reuters whether officials in Mexico had raised those concerns, Li only responded that they had been receptive to BYD’s plan to open a plant here.

Citing unnamed experts, Reuters reported that “cost advantages for BYD come from its early investment in EV technology and a high degree of vertical integration the company has achieved over the years.”

In the final quarter of last year, the company sold 520,000 EVs to become the world’s top electric vehicle manufacturer by sales, overtaking Tesla. The vast majority of those sales were in China, but BYD is now looking to get more of its EVs onto streets in other parts of the world.

To that end, the company launched its Dolphin Mini EV in both Mexico and Brazil on Wednesday. BYD plans to sell the electric hatchback — the most compact of its “Ocean Series” — for 358,800 pesos (about US $21,000), or less than half the price of the cheapest vehicle currently made by Tesla.

“It’s affordable … so every Mexican can bring their first electric car home,” Li said at a launch event in Mexico City.

Vallejo said the company — which entered the Mexican market last April — hopes to sell 50,000 Dolphin Minis in Mexico this year.

BYD’s sales in Mexico are “doubling monthly,” according to Reuters, but Li said that the company still faces challenges in convincing Mexicans to purchase EVs. The fact that Mexico does not yet have a vast network of charging stations is one significant barrier to increased adoption of EVs.

In addition, “a lot of hard work” is required to “educate” Mexican consumers about EVs, Li said.

A number of automakers have recently announced plans to make EVs in Mexico. They include Volkswagen, Solarever Electric Vehicles (another Chinese company) and Tesla, which plans to build a new “gigafactory” near Monterrey, Nuevo León.

Tesla intends to make a new low-cost EV in Mexico after first beginning production of the planned US $25,000 “next-gen” model at its Austin gigafactory. Perhaps that vehicle will help the Elon Musk-led company compete with BYD on price in a Mexican EV market that still has plenty of room to grow.

Musk has expressed concerns about Chinese automakers’ access to the United States and other markets, saying in January that “if there are no trade barriers established, they will pretty much demolish most other car companies in the world.”

BYD, Reuters reported, “may bring aggressive price cuts to Mexico, just as it has done in its home market, forcing rivals to slash costs to keep up.”

With reports from Reuters, Mexico Industry and Milenio