Mexico May Assist Major Chinese Carmaker in Breaking into the US Market

Over 5,000 electric cars were loaded onto a huge shipping carrier in China this week and sent to ports in Europe. These cars are from BYD, the Chinese carmaker supported by Warren Buffett and now the world's biggest seller of electric vehicles, surpassing Tesla.

BYD used its colossal vessel, named "BYD Explorer No. 1," for the first time to transport its exports from Shenzhen, China, to Germany and the Netherlands, as reported by the Chinese state news agency Xinhua. This visually showcases BYD's growing influence, having dominated its home market and now aiming to sustain its momentum on international routes.

To achieve this, two key countries are crucial: Hungary and Mexico. Though not major car markets, they could serve as gateways to Europe and North America, supporting BYD's ambition to become a global household name.

BYD has already started making strides in both locations. In December, it committed to establishing a factory in Hungary, marking its first production plant for passenger cars in Europe. This move is significant for Hungary, as it is one of the largest investments in the country's history, creating thousands of jobs in Szeged, a southern city.

The company is also contemplating setting up operations in Mexico, expressing interest in building a plant there. However, as of January, no official plans have been confirmed. Experts believe that these expansions will assist BYD in gaining footholds on both sides of the Atlantic, potentially avoiding substantial tariffs and navigating a challenging geopolitical environment.

BYD's expansion into Hungary and Mexico is not merely a reaction to growing protectionism, according to industry observers. It is seen as part of the company's broader strategy for global expansion and manufacturing footprint.

Hungary, with its emerging importance as an automotive production hub in Europe, is a strategic choice. BYD's new plant in Szeged will provide free trade access not only to Hungary but also to 26 other European Union member states, offering cost advantages in terms of labor and energy.

This move is timely, considering the possibility of rising European tariffs on cars imported from China following an EU investigation into China's state support for EV makers. BYD's Hungarian factory is expected to allow the company to bypass these potential duties.

A similar strategy is anticipated in Mexico, where BYD could use the country as an entry point for manufacturing and exporting into North America. With its electric buses and cars already being sold in Mexico, setting up production there could be a strategic move to avoid steep import duties in the United States.

BYD's global journey began in 1998 when it established its first overseas subsidiary in Rotterdam, Netherlands, focusing initially on battery imports. Over the years, the company expanded its presence to more than 70 countries, rapidly growing its overseas production. In 2023, BYD became the best-selling car brand in China, emphasizing its pivot towards prioritizing overseas sales.

As BYD continues its overseas growth, a localized approach, including building factories near key markets, becomes crucial. This not only demonstrates a commitment to creating local jobs but also helps the company gain favor with governments in those regions. Geopolitics plays a significant role in BYD's strategy as it seeks to maintain its position as a global leader in the electric vehicle market.