Electric Vehicle

Mexico halts incentives for Chinese EV makers

Date: April 20, 2024.The Mexican federal government has decided to stop providing incentives to Chinese electric vehicle (EV) manufacturers. This move comes as a response to pressure from the United States and signals a change in Mexico’s approach to foreign investment in its EV sector.

Mexico previously offered incentives like low-cost public land and tax cuts to attract investment from automakers. However, recent developments suggest that the Mexican government is now maintaining a cautious distance from Chinese automakers. The most recent meeting between Mexican officials and a Chinese automaker took place in January, involving executives from BYD Co, a significant EV manufacturer by sales volume.

During this meeting, Mexican officials clarified that they would not extend incentives previously awarded to automakers. Furthermore, future meetings with Chinese automakers are on hold. This decision reflects concerns about Chinese automakers accessing the US market through Mexico, potentially circumventing tariffs and other trade barriers.

The move is attributed to pressure from the US government, particularly the Office of the United States Trade Representative (USTR), which aims to prevent Chinese automakers from entering the free trade zone established under the North American Free Trade Agreement (NAFTA).

The Mexican Economy Ministry declined to comment. The office of Mexican President Andres Manuel Lopez Obrador did not immediately respond to a request for comment. A White House spokesperson affirmed President Joe Biden’s stance: Chinese vehicles threatening national security won’t inundate the US market.

Currently, approximately 20 Chinese automakers distribute cars in Mexico, yet none operate a manufacturing facility within the nation. Chinese vehicles account for approximately a third of the total brand offerings in Mexico.

The USTR official did not directly address the reported pressure. They emphasized instead that the United States-Mexico-Canada Agreement (USMCA) was not intending to provide a backdoor for countries like China to access the US market without adhering to the established tariffs.

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