The future of Chinese auto giant BYD’s proposed plant in Mexico remains uncertain amid concerns in Beijing that the tech secrets of its top electric vehicle-maker might leak to the United States, according to a report by the Financial Times.
China’s biggest concern is “Mexico’s proximity to the US,” the FT reported, citing people familiar with the matter.
That concern has led the Chinese commerce ministry to hold off on approval for BYD’s planned plant in Mexico. Chinese automakers require state approval to manufacture overseas.
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The Xi Jinping administration fears a plant in the country would give Mexico unrestricted access to BYD’s advanced technology and EV knowhow, the FT reported. It is also concerned that Mexico could give the US access to BYD’s tech, the report added.
BYD has made several breakthroughs in EV technology in recent months, including a 5-minute fast-charging platform, driver assistance tech that it is currently handing out for free and hybrid technology that would give its cars a driving range of over 2000 kilometres.
Those innovations have also helped BYD steal a march over its closest rival — Elon Musk-led American EV-maker Tesla, which has seen sales slump and faced increasing criticism about a lack of innovation in its lineup.
BYD is also a leading battery-maker — a technology most American EV firms are yet to master.
That tech prowess would explain Beijing’s concern around the possibility of its BYD’s knowhow leaking to China’s biggest rival, the US, with which it is fighting an intense trade and technology war.
Speaking to FT about the stalled Mexican plans, BYD’s executive vice-president Stella Li said the carmaker had “not decided [on] the Mexico facility yet”.
BYD investors, meanwhile, remained unfazed by the uncertainty around the carmaker’s Mexico plant. The carmaker’s Shenzhen-listed stock closed with gains of more than 3% on Wednesday, as against an overall 0.1% fall on the Shanghai Composite.
Wednesday’s closing was just shy of the record high BYD hit earlier in the day, with its shares rallying more than 55% in the last six months.
Trade war impact
The global trade war started by US President Donald Trump has also weighed on BYD’s Mexican plans. The FT reported.
In the face of Trump’s threats of steep tariffs, Mexico has aligned itself more closely to the US, and also imposed tariffs on Chinese textiles. Mexico’s Claudia Sheinbaum government is also currently investigating steel and aluminium products originating from China for dumping.
The changing dynamic has led Mexico to cool on the BYD plant, FT reported.
“Mexico’s new government has taken a hostile attitude towards Chinese companies, making the situation even more challenging for BYD,” the newspaper quoted one source as saying.
Mexico’s shifting stance has also been brought on by American concerns that the country might become a gateway for Chinese electric vehicles to enter into the US.
Those concerns were especially pronounced when BYD began an expansion into Mexico last year. The carmaker declared, however, that its Mexico factory was not meant for exports.
BYD’s big expansion plans
Despite the potential setback in Mexico, BYD continues to have big plans to expand beyond the Chinese mainland.
Early this month, it raised $5.59 billion in a primary share sale in Hong Kong, proceeds which it plans to use to expand its overseas businesses.
This week, it said it was aiming to pick a location for its third European plant before the end of the year.
“All options are on the table, all countries are in the process at the moment,” the EV giant’s special adviser for Europe Alfredo Altavilla said.
- Vishakha Saxena
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