Cars, for the US the China danger comes through Mexico. Here are BYD's plans

The Chinese danger, escorted to the door by law, in the United States risks coming back in through the window. Mexico. BYD, which has become with exponential growth (it practically quadrupled its sales between the first quarter of 2022 and the fourth quarter of 2023) the world's leading producer of electric cars, including plug-in hybrids, is betting on the strength of exports. And after having laid the foundations to gain share in Europe, where the declared objective is to be the leader in electric cars by 2030, it is looking to the large North American market.

In order to do so, however, it must circumvent the heavy tariffs (up to 25%) on imports from China and the obstacle of the Inflation Reduction Act (IRA), the law passed by the US Congress in August 2022 that allocated hundreds of billions for the ecological transition, including automotive. As a matter of fact, one cannot enjoy the incentives offered by the Washington government, up to $7,500 per car, if one does not ensure that a substantial portion of the components, starting with the mineral components needed to produce batteries, are sourced in North America.

This is why BYD (an acronym for Build Your Dreams, among the shareholders who matter there is also Warren Buffett), is planning, according to the Japanese economic newspaper Nikkei Shinbun, to set up a new production plant in Mexico (as it has already done in Europe, the site will be operational within three years in Hungary, also with public funds). Nikkei quoted the head for Mexico of the Chinese group - which is also a leader in batteries for cars, bikes and smartphones, as well as producing electric trains and buses and photovoltaic storage systems - as saying that the Shenzhen-based company is aiming to create an export hub to the United States.

BYD, which for the first time overtook its main rival Tesla in the fourth quarter of 2023 to become the first battery-powered car manufacturer, has reportedly started a feasibility study for a new plant in Mexico and is negotiating with government officials at various levels for the location and other conditions, Nikkei again reported.

BYD currently concentrates 90 per cent of the 3.02 million new energy cars sold (battery and plug-in) in China, but aims to double exports from 250,000 to 400,000 by 2024. Other markets targeted include South-East Asia, particularly Thailand. Good growth had already occurred in Israel, where the brand had gained fifth position by 2023. But of course at the top of the wish list is Europe, where the Shenzhen brand, in terms of market share, is still at an early stage, with percentages in the area code or single digits in most of the (Nordic) countries where it started selling no more than three years ago. 'Production abroad is indispensable for an international brand,' said Zhou Zou, country manager of BYD Mexico.