Chinese EV players are expanding rapidly in developing markets like Brazil, Mexico, and Southeast Asia.
iStock; Rebecca Zisser/BI
China’s EV upstarts appear to be plotting world domination. They are targeting developing markets like Brazil and Indonesia as the US and Europe impose tariffs.Experts told BI that Western car giants run the risk of ceding the rest of the world to China.
When Ford closed its factory at Camaçari in the Brazilian state of Bahia in 2021, it ended a century of manufacturing in Brazil.
The Detroit automaker has always been closely associated with Brazil’s car industry, the sixth largest in the world.
Now, Camaçari is under new management.
Chinese EV giant and Tesla rival BYD has swept into the huge complex and is transforming it into a manufacturing center for its electric cars to capitalize on surging demand for Chinese-made EVs in Brazil.
It’s a pattern being repeated all over the world. Chinese EV firms are expanding rapidly in developing markets like Brazil, Mexico, and Southeast Asia, even as governments in the US and Europe try to shut them out with tariffs and trade barriers.
Data compiled by technology intelligence firm ABI Research for Business Insider suggests that Chinese automakers already dominate many of these markets.
Chinese carmakers accounted for 88% of the EV market in Brazil and 70% in Thailand in Q1, according to ABI Research figures. BYD, alone, which is China’s largest EV company, accounted for 71% and 45% of EV sales during that time in those respective markets.
The EV markets in many of these countries are small now, but they’re growing rapidly.
That’s a problem for legacy automakers like Ford and current combustion-vehicle market leaders like Toyota and Volkswagen, who may struggle to compete with Chinese players and risk being left behind as developing markets shift toward EVs.
This is because Chinese automakers are known for their ability to build electric cars for less than their foreign competitors.
Western governments are taking steps to protect their markets, with Joe Biden imposing sweeping tariffs on Chinese automakers and the EU passing its own measures.
But those barriers do little to protect legacy automakers in developing markets, with experts telling Business Insider they faced the prospect of being lapped by the Chinese upstarts.
“By erecting a wall around the EU or the US, you’re effectively ceding the rest of the world to China,” Bill Russo, the CEO of Shanghai-based automotive strategy firm Automobility, told BI.
Joe Biden imposed 100% tariffs on China-made EVs in May.
AP Photo/Susan Walsh
Sam Fiorani, vice president at consultancy AutoForecast Solutions, agreed, pointing out that the ability to build more affordable vehicles gave Chinese EV makers a crucial edge in many of these markets.
“A lot of these markets are underdeveloped, and the Chinese brands are bringing in relatively inexpensive vehicles, which is exactly what those countries need at the moment,” he said.
Brazil
Chinese firms are already the EV market leaders in Brazil, and they appear set to capitalize on the rapidly growing market for electric vehicles in the country.
EV sales in Brazil were up 145% in the first three months of the year, according to the Brazilian Electric Vehicle Association, with BYD and rival Great Wall Motors leading the pack.
Like the US and EU, Brazil has imposed tariffs on all imported EVs, which are expected to hit 35% in 2026.
However, unlike the European and US governments, Brazilian President Luiz Inácio Lula da Silva has proven more open to China, offering incentives and financial support for foreign manufacturers willing to invest in green technology in Brazil.
Great Wall and BYD have both pledged to build factories in the country. BYD estimates that its Camaçari complex will be able to churn out 150,000 vehicles per year once it opens, while Great Wall’s site near São Paulo could eventually produce 100,000 vehicles annually.
Business Insider contacted BYD for details on its expansion plans but didn’t hear back.
President of Brazil, Luiz Inacio Lula da Silva (L) arrives at Johannesburg for the 15th BRICS summit in South Africa on August 21, 2023.
BRICS / Handout/Anadolu Agency via Getty Images
One of the reasons that BYD can sell its cars so cheaply is that many of the components and parts used to build its cars are manufactured in-house — and BYD is seemingly trying to recreate that integrated supply chain in Brazil, reportedly holding talks about taking over one of the country’s lithium producers.
“Investing now in developing markets like Brazil comes with some risk,” said Marcel Martin, Brazil managing director at the International Council on Clean Transportation think tank, pointing to the still relatively uncertain outlook for Brazil’s developing EV market.
“But for firms like BYD, the reward can be bigger, because if they assume the leadership in these markets it will be hard for other automakers to compete,” he said.
Mexico
When it comes to Chinese plans for global EV domination, nowhere worries the US quite like Mexico.
America’s southern neighbor has a free trade agreement with the US, and reports suggesting BYD, MG, and Chery were all examining plans to build factories in the country caused alarm among US officials last year.
Some US lawmakers have warned that Mexico could serve as a “backdoor” for Chinese EV companies, and US trade representative Katherine Tai recently hinted at additional penalties for Chinese firms that try this tactic.
The BYD Shark hybrid pickup.
BYD Auto México
But Mexico is also a big market in its own right, and Chinese automakers are hungry for a slice.
BYD recently unveiled the hybrid “Shark,” the company’s first pickup truck, which is set to go on sale in Mexico for $54,000.
Mexico’s EV market is still nascent, but the government wants 50% of new car sales to be electric by 2030. Total automobile exports from China jumped by nearly a third in the first four months of 2024, according to data from the China Passenger Car Association, reported by Reuters —suggesting consumers are more than open to Chinese vehicles.
Southeast Asia
Southeast Asia has traditionally been dominated by Japanese automakers, who have had success selling smaller, cheaper vehicles.
However, Chinese EV companies are now breathing down the necks of Toyota, Honda, and Mitsubishi, largely thanks to their ability to outcompete just about everyone on cost.
Thailand, which saw EV sales rise by 400% in 2023, has quickly become one of BYD’s most important international markets. The Southeast Asian nation accounted for 20% of BYD’s international sales in Q3 last year, according to research firm Counterpoint, and the Chinese automaker is due to open a new factory in Thailand later this year.
Other markets in this region are also seeing rapid EV growth, with electric car registrations tripling in Malaysia in 2023 and EVs hitting 15% market share in Vietnam, according to the International Energy Agency.
Meanwhile, Indonesia aims to boost EV sales by rolling out a range of tax incentives and is wooing Elon Musk to build a Tesla factory in the country.
Musk may have to get moving, however. BYD has announced plans to build a $1.3 billion factory in Indonesia’s West Java province. Earlier this year, it also unveiled its new models coming to the country.
Tesla CEO Elon Musk during a visit to Indonesia in May.
SONNY TUMBELAKA
“The Chinese have taken significant share in Southeast Asia with exports. They’re also planning local production in Thailand, in the Philippines, and other places in the region,” Bill Russo of Shanghai-based automotive strategy firm Automobility told BI.
“If the Japanese are nervous about losing China, they’re even more nervous about losing the global south,” he added.
Australia
In Australia, BYD is going head-to-head with Tesla in a fast-growing EV market.
Tesla accounts for over half of Australia’s EV market but BYD, which entered the Australian market in 2022, is catching up fast, hitting 14% market share in March, according to data from Australia’s Federal Chamber of Automotive Industries.
BYD posted record sales in the country in May and is adding two SUVs and a pickup truck to its EV lineup this year.
Unlike Europe and the US, Australia has no tariffs on foreign EVs, and the country’s left-leaning government, which came to power in 2022, has outlined its push to increase the supply of affordable and accessible EVs.
Other Chinese EV firms are also making inroads into the continent, with SAIC Motor planning to launch three new models this year and Hangzhou-based startup Leapmotor, which specializes in affordable EVs, labeling Australia a priority market.
The BYD Atto 3.
John Keeble/Getty Images
That expansion has not been without controversy, however. Australian Senator and shadow cyber-security minister James Paterson said earlier this year that Chinese EVs pose a growing cybersecurity risk.
One Chinese EV played a vital role when flash floods hit the Australian state of Queensland earlier this year, however, powering an 11-year-old’s dialysis machine after local electricity supplies were knocked out by the storm.
India
India has proved a tough nut to crack for foreign EV giants.
The world’s most populous nation had some of the highest taxes on imported vehicles before it lowered them for certain vehicles in March.
The new rules require automakers to spend at least $500 million on local investment and build their cars within India within three years— something Tesla is now reportedly considering doing.
The geopolitical tension between India and China has traditionally made India wary of Chinese EV companies, but experts told BI that this is likely to change in the coming years.
“Chinese companies are already looking at building local plants in order to take advantage of that growing market,” Fiorani, vice president of AutoForecast Solutions, told BI.
“It’s just a matter of time before companies like BYD, SAIC, and Great Wall actually become volume players in that region,” he added.
The Cyberster EV.
Indranil Aditya/Getty Images
BYD launched its third EV for the Indian market, the $49,000 Seal, in March. It has ambitious plans to control 40% of India’s EV market by 2030.
Rival SAIC Motors has partnered with India’s JSW Group to introduce a high-end electric sports car, “Cyberster,” to India.
“India is still a little wary of the Chinese market,” said Dylan Khoo, an analyst at ABI Research. “But India is also happy to adopt China’s own model, and make Chinese firms work with local automakers to gain access to the market.”
Europe
Europe is another market being eyed by Chinese EV manufacturers as they expand abroad.
Once again, BYD is leading the way. The Warren Buffett-backed automaker is already building one European factory in Hungary and is reportedly considering a second.
BYD is also planning to release its $10,000 Seagull in Europe within the next few years, with executives estimating it will cost around 20,000 euros — or $21,000 — in this region.
Rivals, including Xpeng and battery-swapping pioneer Nio, are also expanding their presence on the continent.
Nio plans to launch a cheaper sub-brand in Europe in 2025, dubbed “Firefly,” and Xpeng has begun selling its G9 and the G6 electric SUVs in France, Spain, and Portugal in recent months.
Some Chinese carmakers are even joining forces with European rivals, with Stellantis partnering with Chinese firm Leapmotor to sell its EVs in Europe.
William Li, the CEO of Chinese EV startup Nio.
HECTOR RETAMAL/Getty Images
Chinese expansion in Europe may have become more difficult, however, after the European Union followed America’s lead and imposed new tariffs on China-made electric vehicles.
Fiorani and Russo told BI that tariffs such as those introduced in Europe and the US might slow the entry of Chinese EVs into Western markets, but ultimately, they would not stop them.
“Right now, tariffs are focused on vehicles built in China. Once those vehicles have a production hub in Mexico or South Korea or Brazil, it becomes more difficult,” said Fiorani.
He said that building plants in Brazil and Europe would allow Chinese firms to circumvent trade walls and continue their global expansion.
“The Chinese manufacturers are very entrepreneurial and they will find a way around any barriers that are set for them,” Fiorani added.
The BYD Seagull, which sells for $10,000 in China, is coming to Europe within the next few years.
WuYuan/Getty Images
Russo, meanwhile, told BI that far from holding back China’s EV giants, trade barriers would only accelerate their global takeover.
“When you impose a tariff, it actually accelerates the movements of both the supply chain and the carmakers to go global even faster,” he said.
“Tariffs will accelerate their move to go to the unaligned regions, which are the emerging markets,” he said.
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