BYD Plans Expansion Strategy. New Electric Vehicle Plant in Mexico for the North American Market

Mexico is becoming a hub for electric vehicle manufacturing, with an increasing presence of Chinese manufacturers looking to establish a foothold in the North American market. One such manufacturer is BYD, which is considering setting up a plant in Mexico to take advantage of lower export costs to the United States.

According to statements made by BYD Mexico's Country Manager, Zhou Zou, to the Japanese newspaper Nikkei, the company is conducting a feasibility study and negotiating with federal and state public officials to define the location and characteristics of its new overseas plant. So far, Nuevo Leon, the Bajio, and the Yucatan Peninsula are the most strategic regions for BYD.

BYD's decision to invest in Mexico is not only linked to financial advantages and trade agreements with the United States and Canada. BYD has recognized that Mexico's manufacturing industry, which boasts skilled labor and productive and logistical infrastructure, is very attractive for multinational electric vehicle companies like BMW, Solarever, Stellanis, and Volkswagen, which announced investments exceeding $3.2 billion in the past year. With this move, BYD also plans to strengthen its position against Tesla, one of its main competitors that will build a gigafactory in Nuevo Leon, and join several Chinese suppliers that announced parallel investments to Elon Musk's company, worth nearly $1 billion.

It's worth mentioning that, in the last quarter of 2023, BYD surpassed Tesla in global electric vehicle sales, although 92% were concentrated in China. To expand its international presence, BYD is building plants overseas, including two projects in Thailand and Hungary, as well as an investment of about $605 million in a plant in Brazil, in addition to its plans in Mexico.

The Electric Vehicle Industry in Mexico

The electric vehicle industry has been strengthening in Mexico due to growing interest in sustainable mobility and investments in charging infrastructure. Although this industry represents around 4% of national vehicle sales, in the last year, sales (including hybrid vehicles) surged by 41%, according to data from the National Institute of Statistics, Geography, and Informatics (INEGI).

The commercialization of electric and hybrid vehicles in Mexico increased in the context of strengthening the overall vehicle industry. Between 2022 and 2023, national vehicle production rose by 14%, sector sales rebounded by 24%, and exports grew by 15%.

Within this growth scenario in the Mexican vehicle industry, the increase in the production of Chinese vehicles in the country stands out. Between 2022 and 2023, the manufacturing of these vehicles experienced a rise of at least 11%, reflecting the growing presence of Chinese brands in the Mexican automotive market. This increase aligns with the global expansion trend by Chinese vehicle manufacturers, who are looking to consolidate their presence in international markets by competing with advanced technology and competitive prices.

The expansion of Chinese vehicle and parts companies has made its mark on the industrial real estate market. According to SiiLA, in the last year, the gross leasable area of these companies increased by 23%, surpassing 900,000 square meters. This upward trend will strengthen diversification and competition in the market and contribute to job creation and technology transfer at the national level, positively impacting workforce specialization and attracting new investments, promoting collaboration and innovation in one of the country's most important manufacturing sectors, such as the automotive industry.

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