Mexico Bows to US Pressure

The United States has won an important battle in its war to keep low-cost Chinese electric vehicles from American car buyers. Today, Reuters reports that the Mexican federal government has responded to pressure from the US and will not offer incentives to Chinese automakers, like BYD, that are looking to establish North American manufacturing operations.

BYD last met with Mexican officials in January, according to Reuters, where it learned that Chinese automakers would not be offered tax breaks or cheap land to build factories.

Until now, Mexico has offered foreign automakers generous subsidies that have made the country a cheap place to build cars. Added to that, the United States-Mexico-Canada Free Trade Agreement also makes Mexico desirable for ease of access to the US market, and Chinese automotive part suppliers have flocked to the country in recent years.

BYD may yet succeed in opening a Mexican factory, however. State governments in Mexico, while less generous, also offer subsidies to automakers—in December 2023, the state of Nuevo León gave Tesla $153 million in incentives, and BYD had not abandoned its quest in February after it had already learned of the Mexican federal government’s decision.