How China rose to prominence as Mexico’s top auto supplier
Due to taxes, Chinese manufacturers of electric vehicles have been forced to sell their cutting-edge vehicles outside of the United States. However, Mexican EV sales have become popular, and Washington authorities are concerned that Mexico may be exploited as a «backdoor» to the US market.
According to the Mexican Ministry of Economy, China was Mexico’s top auto supplier in 2018, sending cars valued at $4.6 billion. Affordable price tags have won over even EV-skeptical buyers. Rival to Tesla, BYD charges slightly more than half the price of the least expensive Tesla for the Dolphin Mini in Mexico, which retails for approximately 398,800 pesos, or about $21,300.
A few Chinese electric vehicle manufacturers, such as BYD, have been investigating plant locations in the Mexican states of Durango, Jalisco, and Nuevo Leon in an attempt to get more traction in North America. The foreign investment would help Mexico’s economy. According to BYD, a facility there would generate about 10,000 employment.
The United States-Mexico-Canada Agreement (USMCA), a redesigned version of the North American Free Trade Agreement (NAFTA), which eliminated tariffs on a wide range of commodities exchanged between the North American nations beginning in 2018, includes this free trade access. Under the deal, items manufactured by foreign automakers in Canada or Mexico that can demonstrate local sourcing of construction materials can be essentially duty-free when exported to the United States.
According to experts, pressure from the United States puts Mexico in a challenging position to preserve its vital connection with the United States without being unduly welcoming of Chinese investment.
