US changes Mexico’s stance on Chinese OEMs

Under pressure from the US authorities, Mexico has withdrawn offers of incentives to Chinese electric vehicle (EV) manufacturers to set up in the country. Moreover, meetings between the Mexican government and Chinese OEMs have reportedly, for now at least, ended. In January 2024, BYD was apparently the last Chinese company to have a meeting with Mexican government officials regarding locating a factory there.

Around 20 Chinese car brands are sold in Mexico, holding around a 30% market share. However, other than JAC, a truck maker, there is no Chinese vehicle production in the country itself. The prospect of Chinese production in Mexico is something the US authorities are keen to avoid; they fear a flood of imports of Chinese products assembled in Mexico with very low levels of local or regional content. Such practice would technically be in breach of the existing US-Mexico-Canada (USMCA) trade agreement that mandates certain levels of regional local content for tariff-free sales across the USMCA borders.