Byd and Geely compete in Mexican factory to circumvent Trump tariffs on electric vehicles

Chinese automakers Byd and Geely have submitted proposals to acquire a factory in México previously operated by Nissan and Mercedes. The unit has an annual capacity of 230 thousand vehicles and represents a strategy to establish local production in América of Norte. Essa movement occurs in response to tariffs imposed by the Trump administration on automotive imports.

Tariffs of 25% on vehicles manufactured in México and up to 100% on electric cars directly from China make Chinese exports to Estados Unidos difficult. Acquiring the plant would allow companies to produce locally and reduce trade barriers. Fontes of the sector indicate that negotiations are progressing amidst a scenario of restructuring of the regional automotive market.

The México recorded a drop in vehicle exports for the Estados Unidos in 2025, directly influenced by protectionist measures. The possible entry of Chinese investments could generate jobs, but it also raises debates about external dependence.

Strategy of Chinese automakers

Byd focuses efforts on expanding global presence through production outside of China. The company already operates units in other América Latina countries and seeks to strengthen its position in the electric vehicle segment.

Geely, in turn, adopts a similar approach when investing in foreign facilities. The brand controls other international production lines and sees the México as a gateway to North American markets.

• Local production avoids direct tariffs on Chinese imports.
• Facilitated access to the Estados Unidos market via regional commercial agreements.
• Reduction in logistics costs compared to Asian exports.
• Use of qualified Mexican labor in the automotive sector.

Impact of tariffs on the Mexican sector

The tariff measures announced by Trump in 2025 directly affected the automotive industry of México. The country exported around 2.8 million vehicles to the Estados Unidos in previous years, but recorded a significant decline after the imposition of the 25%.

The Mexican industry association reports a decline of almost 3% in exports last year. Projeções indicate an even greater drop in 2026 if the barriers remain unchanged.

México responded with a 50% tariff on imported Chinese cars. Essa measure aims to protect local production, but does not prevent direct investment in factories.

Mexican authorities are evaluating the Byd and Geely proposals with caution. Chinese investment could offset job losses caused by the exit of other automakers.

Context of trade barriers

The Trump administration maintained and expanded tariffs on Chinese electric vehicles to protect American industry. The tariffs reach 100% on direct imports from China, limiting access for brands like Byd to the US market.

Other countries have adjusted similar policies. Canadá, for example, reduced tariffs for a limited quota of 49,000 Chinese vehicles per year in a recent agreement.

União Europeia imposed additional duties on Chinese Evs last year. Essas global barriers encourage automakers to seek regionalized production.

Details of the disputed factory

The unit located at México has infrastructure for 230 thousand vehicles per year. Anteriormente managed by a partnership between Nissan and Mercedes, the plant was idle after relocating production.

The installed capacity attracts interest from multiple players. Byd highlights expertise in batteries and electric motors for rapid line conversion.

Geely brings experience in modular platforms. The company can adapt the factory for hybrid and electric models of its sub-brands.

Negotiations involve the Mexican government in discussions about tax incentives. The final decision depends on guarantees of job creation and technology transfer.

Recent company movements

Byd recorded significant growth in Latin American markets despite restrictions. The automaker dominates around 70% of sales of electric and plug-in hybrids in the México.

The Geely increased sales in the country by more than 237% in 2025. The performance reflects acceptance of affordable models equipped with advanced technology.

Both companies face lawsuits in the Estados Unidos questioning the legality of the tariffs. Byd filed a lawsuit alleging irregularities in the application of rates.

Perspectives for the North American market

Mexican production can allow exports with reduced tariffs for the Estados Unidos. Analistas point out that locally assembled vehicles bypass part of the barriers imposed on China.

The American automotive sector monitors developments closely. Montadoras Traditional manufacturers fear competition from cheaper Chinese models even with price adjustments.

México balances attracting foreign investment with protecting national industry. The entry of Chinese capital represents an opportunity for recovery after tariff impacts.

The dispute over the factory signals a new phase in the global expansion of Chinese automakers. Companies adapt strategies to overcome commercial restrictions and maintain growth in electric vehicles.

Evs Market Data

The electric vehicle segment is growing worldwide despite the barriers. China accounts for the majority of global production and seeks alternative markets.

• Mexican sales of Chinese models reached 306 thousand units in 2025.
• The share of electrified vehicles reached 9% of the total in the country.
• Canadian quota allows up to 49 thousand Chinese imports annually.
• Expansion projection to 70 thousand units in five years.

These numbers demonstrate the resilience of the Chinese sector in the face of tariffs. Production relocation appears to be a viable long-term solution.