China Conquers Mexico's Automotive Market, and the US Is Worried

This communicative originally appeared connected WIRED en Español and has been translated from Spanish.

China has positioned itself arsenic the main car supplier successful Mexico, with exports reaching 4.6 cardinal dollars successful 2023, according to information from Mexico's Secretariat of Economy.

BYD, the Chinese automaker, surpassed Honda and Nissan to presumption itself arsenic the seventh largest automaker successful the satellite by fig of units sold during the April to June quarter. This maturation was driven by accrued request for its affordable electrical vehicles, according to information from automakers and probe steadfast MarkLines.

BYD's caller conveyance income rose 40 percent twelvemonth implicit year to 980,000 units successful the quarter—the aforesaid 4th wherein astir large automakers, including Toyota and Volkswagen, experienced a diminution successful sales. Much of BYD's maturation is attributed to its overseas sales, which astir tripled successful the past twelvemonth to 105,000 units.

BYD is considering locating its caller car works successful 3 Mexican states: Durango, Jalisco, and Nuevo Leon. Foreign concern would beryllium an economical boost for Mexico. BYD has claimed that a works determination would make astir 10,000 jobs. BYD, a Tesla competitor, markets its Dolphin Mini exemplary successful Mexico for astir 398,800 pesos—about $21,300 dollars—which is simply a small much than fractional the terms of the cheaper Tesla.

Prevented from selling their wares the United States owed to tariffs, Chinese EV manufacturers person explored different markets to merchantability their high-tech cars. However, arsenic Mexico establishes itself arsenic a cardinal marketplace for Chinese electrical vehicles, officials successful Washington fearfulness that the state could beryllium utilized arsenic a "back door" to entree the US market.

That tariff-free entree is portion of the US-Mexico-Canada Agreement (T-MEC), an updated mentation of the North American Free Trade Agreement that, arsenic of 2018, eliminated tariffs connected galore products traded betwixt the North American countries. Under the treaty, if a overseas automotive institution that manufactures vehicles successful Canada oregon Mexico and tin show that the materials utilized are locally sourced, its products tin beryllium exported to the United States virtually duty-free.

According to authoritative figures, 20 percent of airy vehicles sold past twelvemonth successful Mexico were imported from China, representing 273,592 units and a 50 percent summation compared to 2022. Currently, astir of the vehicles imported from China travel from Western brands that person established manufacturing plants successful that country, specified arsenic General Motors, Ford, Chrysler, BMW, and Renault.

Mexico is the 2nd largest marketplace for Chinese automobiles worldwide, down lone Russia, according to information from Linked Global Solutions, a institution specializing successful concern betwixt China and Latin American countries.

A Trade War Against China

Both the United States and the European Union person intensified a commercialized warfare against China, focusing connected automobiles and semiconductor spot production, which person been the taxable of investigations for predatory practices, tariffs, and restrictions. This caller geopolitical strategy is prompting Western companies to look for alternatives to relocate their factories extracurricular of China, a inclination known arsenic "nearshoring."

Concerned astir the imaginable interaction connected home automakers, the US has raised tariffs connected Chinese-made electrical vehicles to 100 percent. Canada is besides considering implementing its ain tariffs connected Chinese-made vehicles.