BYD halts Mexico expansion over US tariff uncertainty
BYD, the world’s largest electric vehicle manufacturer, has canceled plans to build a significant factory in Mexico due to growing concerns over US trade policy. The automaker cited the potential impact of American tariffs on Mexico-made vehicles as a key factor.
“Geopolitical issues have a big impact on the automotive industry,” said Stella Li, an executive vice president at BYD, in an interview with Bloomberg. “Now everybody is rethinking their strategy in other countries. We want to wait for more clarity before making our decision.”
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While BYD confirmed it still intends to expand operations in North or South America, the company has not provided a timeline. In September, 2024, Bloomberg reported that the Chinese EV maker would delay any major investment decisions in Mexico until after the US presidential election. In March, 2024, Mexican President Claudia Sheinbaum stated that BYD had not yet submitted a formal investment proposal.
EV makers adjust global strategy in response to US tariffsAutomakers, including Nissan and Stellantis, have also begun scaling back production in Mexico due to the 25 per cent tariff imposed on vehicles imported into the US. This policy, implemented under President Trump’s second administration, continues to influence manufacturing decisions across the industry.Many automakers are exploring alternative approaches, from offering consumer discounts to offset future price increases to applying import fees on non-US-built vehicles.
Despite the pause in Mexico, BYD is advancing with its first manufacturing facility outside of Asia, located in the Brazilian state of Bahia.
Labor violations in Brazil prompt reassessment of BYD’s expansion model
In December, 2024, Brazilian authorities halted construction at BYD’s Bahia site and filed suit against the company after more than 160 workers were rescued from what officials described as “slavery-like” conditions. A Brazilian labor authority reported that subcontracted workers faced degrading environments and had their passports and salaries withheld by a third-party service provider.
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BYD responded by relocating the affected workers to hotels and stated that it had performed a “detailed review” of subcontractor practices. The company also confirmed it had requested improvements “on several occasions.”
Speaking Wednesday, July 2, Li said the incident influenced BYD’s global strategy: “We should slow down, step back from the focus on speed. We need to work more with local companies,” she said. “It will take longer, but that’s OK.”
Global EV sales remain strong despite operational challenges
BYD continues to challenge Tesla in key markets. The company recently outsold Tesla in Europe and is projected to sell over 5 million electric vehicles in 2025. Chinese EV firms, including BYD, Xiaomi, Nio, and Xpeng, are increasingly capturing market share through competitive pricing and advanced battery technology.
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As of July, 2025, BYD stock is up 38 per cent year-to-date, driven by growing international demand and affordability.
