BYD, Tesla face biggest losses from Mexico’s 50% China tariffs

Electric
vehicle rivals BYD and Tesla will suffer the most from Mexico’s
proposed 50% tariff on Chinese auto imports, potentially reshaping
North America’s fastest-growing car market whilst sparing
traditional US manufacturers, Reuters reported. The levy
targets vehicles from countries without free trade agreements with
Mexico, including China, South Korea, India and Russia.

The
tariff escalation marks a dramatic shift for Mexico’s electric
vehicle market. Tariffs on Chinese-manufactured electric vehicles
have surged from 0% to 15% and now 50% over the past year,
according to Eugenio Grandio, president of the Electric Mobility
Association in Mexico.

‘It’s
definitely a game-changer,’ Grandio said. ‘Fifty percent [tariff]
is a very aggressive number.’

The
measure paradoxically exempts legacy US automakers General Motors,
Ford and Stellantis through a 2003 decree allowing companies with
Mexican production plants to import vehicles tariff-free from
non-free trade agreement countries. Unlike Tesla and BYD, all three
traditional manufacturers operate Mexican facilities.

Tesla
faces significant exposure as all Model 3 and Model Y vehicles sold
in Mexico since mid-2023 originated from its Shanghai factory,
according to Salvador Rosas, vice president of the Tesla Owners
Club in Mexico. The company suspended construction of its planned
northern Mexico factory last year, citing interest rate pressure
and economic slowdown.

BYD
scrapped Mexican factory plans this year amid concerns about
angering US President Donald Trump and jeopardising trade
relations. Despite lacking local production, BYD achieved explosive
growth since entering Mexico in late 2023, selling 40,000 vehicles
in 2024 – nearly half of all electric and plug-in sales.

China
urged Mexico to ‘think twice’ before implementing the tariffs,
warning they would ‘seriously affect Mexico’s business
environment’. Canada’s Automotive Parts Manufacturers’ Association
president Flavio Volpe predicted the Trump administration would
view the measures ‘very favourably’ as they help US manufacturers
compete against BYD.

The
proposed legislation requires approval from Mexico’s Congress,
where President Claudia Sheinbaum’s Morena party holds a
significant majority.

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