How Chinese EV automakers are winning in Mexico

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How ******** EV automakers are winning in Mexico

Blocked from the U.S. by tariffs, ******** electric vehicle makers have looked elsewhere to sell their high-tech cars. But as Mexico has emerged as a hot spot for ******** EVs, Washington officials worry the country may be used as a “*********” to the U.S. market.  

Last year, China was the leading car supplier to Mexico, exporting $4.6 billion worth of vehicles to the country, according to the ******** Ministry of Economy. Even customers wary of EVs have been won over by affordable price tags. Tesla rival BYD sells its Dolphin Mini in Mexico for around 398,800 pesos, or about $21,300, a little over half the price of the cheapest Tesla. 

“The ******** automakers came to the country very aggressively,” said Juan Carlos Baker, former ******** deputy minister for international trade. “They have very good promotions. It’s a good product that sells at a very reasonable price.” 

Some ******** EV makers, including BYD, have been looking for a further foothold in North America by exploring factory sites in the ******** states of Durango, Jalisco and Nuevo Leon. The foreign investment would be an economic boost for Mexico. BYD has claimed that a plant there would create around 10,000 jobs.  

But U.S. officials worry this could be a part of a larger strategy by ******** automakers to skirt trade restrictions and enter the ********* market.  

“Mexico is an attractive production platform, not only for ******** companies, but for other companies as well, in part because of that free trade access that it has to the ********* market,” said Scott Paul, president of the Alliance for ********* Manufacturing. “And it can do something that in trade terms is called circumvention.” 

That free trade access is part of the ******* States-Mexico-Canada Agreement (USMCA), a revised iteration of the North ********* Free Trade Agreement (NAFTA) that removed tariffs on many goods traded between the North ********* countries starting in 2018. Under the agreement, if a foreign auto company manufactures in either Canada or Mexico and can prove that the building materials are sourced locally, the goods can be exported to the U.S. virtually duty-free.  

“We’ve seen China do this in other types of manufacturing as well, from appliances to auto parts to steel,” said Paul. “For more than a decade now, China, the ******* States have been playing a high-stakes game of whack-a-mole when it comes to trade policy tariffs.”

While meeting the USMCA requirements is difficult, the potential scenario terrifies U.S. lawmakers and auto companies.

“If [******** EV makers] are able to set up in Mexico, they would definitely pose an imminent threat to ********* automakers, if for no other reason, because their costs would be lower,” said Michael Dunne, CEO of Dunne Insights.  

In May, President Joe Biden announced a 100% tariff on ******** EVs.

“We [the U.S.] are just starting to scale up our EV industry, so it’s what I call an ‘infant industry,'” said Paul. “And like any infant, it’s at a very delicate time in terms of development and has to be massively protected.” 

Experts say pressure from the U.S. leaves Mexico in a difficult position of maintaining its crucial relationship with America without being overly friendly to ******** investment.  

Watch the video to learn more about how Mexico has become a hot spot for ******** auto companies and how the next administration may impact EV trade policies.  

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