BYD dismisses US ambitions

China’s BYD expects to site an anticipated Mexican plant in the centre or south of the country, because it is not intending to manufacture cars there that will be exported north to the US.

The firm is developing a factory in Brazil that is due for completion next year, giving it a regional team that can also work on a Mexican facility, according to Stella Li, CEO of BYD Americas. It expects to greenlight the investment in the second half of the year.

But Li told Yahoo Finance Live that Mexican manufacturing is not a precursor to importing BYD vehicles into the US. “Our target is that we build a facility in the south or central region… only to mainly support the Mexican market. It is not to build that Mexican manufacturing to support the US [market].

“A lot of US manufacturers are in the north, because it is easy to cross the border. But, for BYD, we are more looking for a place within a 20okm radius of Mexico City, [because] we are more targeted at the local market, Li continues.

“We are not planning to come to the US,” she stresses. “It is too complicated. It is an interesting market, but it is very complicated if you are talking about EVs. The US market has slowed down a little bit on electrification.”

Lack of political clarity

Li admits that politics are one of the complicating factors, but stresses there are others, including issues with the US’ charging infrastructure — adding up to a situation where “it is confusing for the consumer” whether it is the right time to switch to EV.

But she also suggests that partisan US politics, rather than US-China tensions, are more of a problem with US EV uptake. “There is too much confusing noise from different politic[al factions],” Li says, damaging confidence not only for customers but also OEMs.

The latter are therefore “not eager to invest” in US BEV manufacture, the BYD Americas chief continues, in sharp contrast to her firm’s home country. “In China, the message is strong — if you are not investing in electric cars, you are out, you will die, you will have no future,” she says.

And she criticises the Biden administration’s Inflation Reduction Act (IRA) incentives package for “a lot of restrictions” around Chinese suppliers which in turn “brings a lot of complexity to current EV manufacturing”. “It is too complicated for any OEM to achieve [the IRA] targets,” she warns, given Chinese players make up c.70pc of the battery supply chain.

“They should be all-in and they should be open,” Li says of how the US government should change its approach. “Remember why the US is competitively strong, it is because we are an open market. We will welcome everyone to come here and have free competition.

“Now it has become more of a protected market,” she laments.

And Li accuses Western OEMs selling into the US of "over-reacting" and being “a little too scared” by the threat of Chinese EV entrants, citing as an example previous Japanese and South Korean incursions that have only taken a portion of the US market. Earlier this month, lobby group the Alliance of American Manufacturing called for lawmakers to crack down on Chinese automakers' investments in Mexico, fearing "back-door entry" into the US.