Tesla-beating electric vehicle-maker BYD has confirmed plans to set up a factory in Mexico, with a top executive saying the Chinese firm was looking for a location in the country.
The planned factory will have an annual production capacity of 150,000 cars and the company will finalise its location by the year’s end, BYD Americas CEO Stella Li told Reuters on Wednesday.
Reports of BYD’s plans to expand production in Mexico spurred speculation that the EV giant was looking for a way into the US car market, but the Chinese carmaker denied any such plans.
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“Our plan is to build the facility for the Mexican market, not for the export market,” Li said, adding that BYD’s Mexico ambitions are solely geared at local sales.
The company is scouting for factory sites in central and southern areas rather than northern Mexico near the US border, where transportation costs to reach consumers would be expensive, she added.
BYD’s plans alarmed lawmakers and carmakers in the US and spurred calls last week to block the import of Chinese cars and auto parts from Mexico.
US manufacturing advocacy group, the Alliance for American Manufacturing, warned low-cost Chinese cars and parts could lead to the “extinction” of US automakers.
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When asked whether Mexican officials had mentioned US concerns over Chinese automakers, Li said they had been receptive to BYD’s plans.
‘An EV for every Mexican’
BYD outpaced former market leader Tesla in EV sales globally in the fourth quarter of 2023 on the back of lower profit margins that helped it stay toe-to-toe with the Elon Musk-led carmaker’s price war in China.
Musk has said that Chinese carmakers have the capacity to demolish their foreign rivals if they aren’t stopped with protectionist measures.
Analysts say Chinese automakers have been rapidly improving their vehicles and are even moving faster than global rivals in some areas, such as infotainment systems and autonomous driving.
BYD is particularly cost-competitive and aggressive among Chinese players, according to executives from its Chinese rivals already selling cars in Mexico. BYD may bring aggressive price cuts to Mexico, just as it has done in its home market, forcing rivals to slash costs to keep up.
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, experts say, not unlike Tesla.
Like its American EV rival, BYD produces an array of automotive components and systems on its own, from batteries to motors to power management chips to dashboard screens.
BYD executives announced on Wednesday the automaker will begin selling its Dolphin Mini electric vehicle (EV) in Mexico at 358,800 pesos ($20,990), less than half the price of the cheapest Tesla.
At a launch event in Mexico City, Li said the car aims to mix technology and a price point in reach of Mexican consumers.
“It’s affordable … so every Mexican can bring their first electric car home,” she said.
- Reuters, with additional editing by Vishakha Saxena
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