BYD advances plans for Mexican EV plant

Chinese electric vehicle (EV) manufacturer BYD is making significant progress in its plans to establish a manufacturing presence in Mexico, narrowing down potential locations to three states and actively reviewing proposed incentives. This development comes amid a complex backdrop of international trade relations and the global push for EV adoption.

Jorge Vallejo, BYD's Mexico Director General, revealed in an interview on Wednesday that the company is in the final stages of selecting a site for its new plant. The three finalist states, which remain unnamed, have offered a comprehensive package of incentives, including fiscal benefits, land provisions, management support, and preferential pricing arrangements.

"A plant is not only about having the space, but the logistics, all the development, urban infrastructure that is generated, water, gas, everything that is needed for an automotive plant," Vallejo explained. He emphasised that the decision-making process involves a thorough analysis of multiple factors, including logistical considerations crucial for automotive manufacturing.

The company aims to finalise the plant's location by the end of the year, maintaining its ambitious timeline for expanding into the Mexican market. However, this expansion is occurring against a backdrop of geopolitical tensions, with the Mexican federal government reportedly keeping Chinese automakers at arm's length due to pressure from the United States. According to reports from April, federal authorities have refrained from offering incentives such as low-cost public land or tax cuts for EV production investments to Chinese firms.

Despite these challenges at the federal level, state governments appear eager to attract BYD's investment. While Vallejo did not disclose the specific states in contention, industry observers note that Mexico's northern Nuevo Leon state, already an automotive hub hosting Tesla and Volvo facilities, could be a strong contender. Central states like Puebla and San Luis Potosi, with established automotive manufacturing presence from companies like Volkswagen and BMW, are also potential candidates.

The planned facility is set to be a significant operation, with initial production targets of 150,000 units in its first stage, doubling to 300,000 units in the second stage. Vallejo indicated that the plant could eventually reach an annual production capacity of 400,000 to 500,000 units in subsequent years. Importantly, he reiterated that the plant's output is intended to serve the Mexican market, dispelling speculation about potential entry into the U.S. market.

In a move to engage with incoming political leadership, BYD executives are seeking meetings with President-elect Claudia Sheinbaum's team and the economy ministry in the near future. These discussions aim to present BYD's manufacturing and marketing strategies and showcase the company's potential contributions to Mexico's national development.

The advancement of BYD's plans coincides with broader developments in Mexico's automotive sector. French-Italian automaker Stellantis recently commenced EV production at its plant in the State of Mexico, a move celebrated by Mexico's Economy Minister Raquel Buenrostro as a step towards strengthening global supply chains.