Beijing has delayed approving BYD’s plan to establish a manufacturing plant in Mexico due to concerns that its smart car technology could potentially reach the United States. The Chinese government is particularly cautious about the plant’s proximity to the United States and the possible transfer of sensitive automotive advancements, according to sources cited by the Financial Times.
BYD, China’s largest electric vehicle (EV) manufacturer, requires approval from the country’s commerce ministry to produce overseas. However, the ministry has yet to grant authorization for the Mexico plant, initially announced in 2023. The facility was projected to create 10,000 jobs and manufacture 150,000 vehicles annually.
“The commerce ministry’s biggest concern is Mexico’s proximity to the United States,” said a source familiar with the matter.
Beijing is also prioritizing investments in countries participating in the Belt and Road Initiative, potentially diverting resources away from Mexico.
The delay occurs amid escalating trade tensions between China and the United States. The United States has imposed tariffs on Chinese imports, with China responding with countermeasures affecting US$22 billion worth of American goods. Additionally, US officials have expressed concerns that Mexico could serve as a backdoor for Chinese products entering the US tariff-free under the USMCA.
“Mexico’s new government has taken a hostile stance towards Chinese companies, making the situation even more challenging for BYD,” another source stated.
Mexico has imposed tariffs on Chinese textiles and initiated anti-dumping investigations into steel and aluminum imports, aligning with US efforts to limit China’s influence in North America.
Despite reaffirming its intent to invest US$1 billion in Mexico, BYD has yet to finalize a location for the plant. “There is no firm investment proposal from any Chinese company to set up in Mexico,” stated Claudia Sheinbaum, President of Mexico, in November 2024.
BYD has been expanding globally, with announced projects in Brazil, Hungary, and Indonesia. However, some of these international investments have faced setbacks. In December, Brazilian authorities halted construction on a BYD facility over labor violations, prompting the company to terminate a subcontractor.
In Mexico, BYD sold over 40,000 vehicles in 2024 and aims to double that figure while opening 30 new dealerships in 2025.
“Every day brings different news, so we just have to focus on our work. More study is needed on how we can meet expectations and deliver the best results for everyone,” said Stella Li, Executive Vice President, BYD, addressing the challenges surrounding the Mexico project in an interview with the Financial Times.
Beijing has delayed BYD's Mexico plant approval over concerns its smart car tech could reach the US, citing proximity and sensitive tech risks.
mexicobusiness.news
