China's leading electric vehicle manufacturer, BYD, will delay announcing a significant investment in a new plant in Mexico until after the US election, according to sources familiar with the situation. The shift in American policy is causing global businesses to adopt a wait-and-see approach. BYD had been considering three potential locations for a car production facility in Mexico but has paused its search for the time being, according to these sources, who requested anonymity due to the sensitive nature of the information.
The postponement is largely because BYD would prefer to wait and see the outcome of the race between former US president Donald Trump and vice-president Kamala Harris in early November, the people said. They added that BYD’s paused factory plans may still be revived or could change, and no final decision has been made.
“We continue working to build a factory with the highest technological standards for the Mexican market, not for the United States market, nor for the export market”, the company said in a statement attributed to executive vice president Stella Li. One area that was under consideration was around the city of Guadalajara, one of the people said. That region has emerged over the past decade as a technology hub sometimes described as Mexico’s Silicon Valley.
Li also traveled to Mexico City in February to unveil the automaker's Dolphin Mini model, while senior management attended the Formula E Mexico City E-Prix in January at a BYD-sponsored box. Mexico has experienced a wave of investment announcements from both Chinese and Western automotive manufacturers, including Tesla. However, Tesla's planned mega-factory was put on hold in July, awaiting the results of the US election.
Mexico could become one of BYD’s major international production hubs, alongside the facilities it is currently constructing or already operating in Brazil, Hungary, Turkey, and Thailand. Similar to other major Chinese automakers, Shenzhen-based BYD is focusing on localizing production to circumvent the growing number of punitive tariffs imposed by governments worldwide on imported electric cars and plug-in hybrid vehicles from China.
While BYD has previously said any cars built in Mexico would be for local consumption, the prospect of exporting its affordable range of EVs to a huge auto market like the US would be tantalizing. Mexico is seen as a strategically attractive landing point for foreign carmakers given its proximity to the US. It’s also part of a North American free trade agreement with the US and Canada.
US Trade Representative Katherine Tai mentioned that the Biden administration is monitoring potential attempts by Chinese companies to export vehicles from Mexico into the US, and is exploring measures to block such exports if they aim to bypass tariffs on electric vehicles made in China. In a late August interview, BYD's Li indicated plans to meet with Mexico’s incoming president Claudia Sheinbaum, who will assume office on October 1, and noted that the company is still considering three possible locations for its factory in Mexico.