BYD, the top electric car maker from China, has stopped its plans to build a new factory in Mexico. The company made this decision due to rising trade tensions between the United States and China.
New U.S. tariffs have also made it riskier and more expensive to produce cars in Mexico. BYD had looked at several sites in Mexico for the factory but paused its search last year.
The company wanted to see what would happen with the U.S. presidential election and future trade policies. Mexican officials confirmed that BYD never made a formal investment offer.
Chinese authorities also delayed approval for the project, worried that building in Mexico could expose BYD’s technology to the U.S. The U.S. government recently raised tariffs on imported cars and parts, which has forced automakers to rethink their plans.
For example, General Motors is moving some production from Mexico back to the U.S. to avoid extra costs. U.S. car companies say these tariffs could add billions of dollars in expenses.
While BYD waits for more clarity, it is focusing on Brazil instead. The company invested about $1 billion in a new plant in Bahia, which will start by assembling 150,000 cars a year and could double that in two years.
The factory will use parts shipped from China and is expected to create thousands of jobs. BYD faced labor complaints during construction in Brazil but promised to follow all labor laws.
The company says it will now move more slowly and work more closely with local partners when expanding overseas.
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