Automotive

/

Home & Leisure

Chinese EV giants hammered by Biden tariff are welcome in Brazil

Bloomberg News, Bloomberg News on

Published in Automotive News

Shut out of U.S. markets and under fire in Europe, China’s electric carmakers are zeroing in on the countries where they’re welcome. One of the big ones is Brazil.

BYD Co. and Great Wall Motor Co. already dominate EV sales in the world’s sixth-largest auto market. Now the two Chinese giants are are building factories there too — which will help them sell cars free of tariffs across Latin America, just as President Joe Biden pledges 100% charges in the U.S.

That may become the blueprint for other industries and regions. China’s powerhouse manufacturers have raised hackles worldwide because cheap exports threaten the livelihoods of local firms and workers. If they want to reach more global consumers — and with price wars raging at home, they do — Beijing’s companies are under pressure to invest, produce and hire in overseas markets instead of just shipping goods there.

Which is exactly what the auto firms are doing in Brazil. BYD hopes to start output by mid-2025 at a new factory that’s on track to be its first outside Asia. Great Wall aims to beat that benchmark by several months — cranking out SUVs near Sao Paulo before the end of this year.

“Chinese brands must invest outside China,” in order to “avoid making protectionism more severe,” says Ricardo Bastos, Great Wall’s institutional relations director in Brazil.

Beijing’s new industrial giants aren’t welcome in the U.S. They’re viewed with suspicion in western Europe, though France’s premier told visiting President Xi Jinping last week that his country would welcome a Chinese carmaker. Almost everywhere else, they’re forging ahead.

 

In Southeast Asia, Chinese direct investment almost quadrupled last year, a recent study found. In the auto industry, BYD has a major project in Hungary and Chery Automobile last month announcing production plans in Thailand.

Altogether, Chinese foreign investment along the EV value chain likely set a record above $30 billion in 2023, according to the Rhodium Group think tank.

In an interview at the company’s Sao Paulo headquarters — furnished with bright red and yellow sofas, and a ping-pong table that’s popular with Chinese workers — Bastos says he sees Brazil as a gateway to the whole region, “from Mexico, Columbia, Argentina to Peru.” Latin America’s car market is worth almost $130 billion.

Brazil is a major market in itself — and exactly the kind where Chinese producers need to win, according to Yale Zhang, managing director of the Automotive Foresight consultancy in Shanghai. They face “many obvious obstacles that stop them from entering large, developed markets,” he says. “So of course they need to grasp the biggest emerging markets.”

...continued

swipe to next page

©2024 Bloomberg L.P. Visit bloomberg.com. Distributed by Tribune Content Agency, LLC.

Comments

blog comments powered by Disqus