The Chinese company BYD Co Ltd, a world leader in the manufacture of electric cars, plans to open a new factory in Mexico, according to information from Nikkei, citing the company’s director in Mexico, Zhou Zou. This strategic decision seeks to strengthen its presence in the global market and establish an export center to the United States.

BYD, recognized for its high-quality, low-cost vehicles and wide range of models, recently surpassed its main competitor, Tesla Inc, becoming the world’s largest electric vehicle manufacturer in terms of sales.

According to the report, BYD has already initiated a feasibility study for the Mexican plant and is currently in negotiations with officials on terms, including the location of the factory. The state of Nuevo Leon, or perhaps in the Baijo region, are among the possible candidates to host the new plant.

A yellow robotic arm in a battery production plant.

Founded in 1995 as a battery manufacturer, BYD opened its doors with 20 employees working out of offices in an industrial park in Shenzhen, China

Mexico presents itself as an attractive location for this investment, given that the automotive sector employs more than one million people and the country produces 3.7 million cars per year, indicating the presence of a skilled workforce and a solid industrial infrastructure.

BYD currently markets five different models in the Mexican market: Han, Yuan, Tang, Dolphin and Seal. The company seeks to take advantage of Mexico’s large automotive manufacturing sector, which is closely integrated with the North American automotive industry and is home to many of the industry’s major global players.

Studio photo of a blue automobile.

BYD Han.

The controversial, ultra-right-wing Elon Musk predicted that Chinese automakers would “demolish” their global rivals without the application of trade barriers. For its part, the group Alliance for American Manufacturing fears that “the introduction of cheap Chinese cars (…) to the American market could end up being an extinction-level event for the U.S. auto sector,”. The group proposes to block Mexico from exporting parts or vehicles if they come from an Chinese manufacturer even if they are produced locally.

In response to these concerns, the Chinese embassy in Washington stated that China’s auto exports “reflect the high-quality development and strong innovation of China’s manufacturing industry”, and that “the leapfrog development of China’s auto industry has provided cost-effective products with high quality to the world”.

Although most of BYD’s vehicle sales are in China, the company has more global projects, as evidenced by the factories it plans to open in several places, such as Thailand, Hungary and Brazil. In Latin America, BYD plans to invest 3 billion reais (US$620 million) in a new industrial complex in northeastern Brazil.

The first indications of the construction of a plant in Mexico date back to September 2023, when Stella Li, BYD’s global vice president, stated in an interview that the company was considering the idea of manufacturing its vehicles in Mexico. The operations would serve local demand and allow BYD to expand into other Latin American countries.

The opening of a BYD plant in Mexico would represent a significant opportunity for the company to expand its presence in the global market and strengthen its position as a leading electric vehicle manufacturer. This investment would also contribute to the growth of the Mexican automotive sector, job creation and technology acquisition in the field of electric vehicles.