What do people expect Mexico to do? It's entirely reliant on America's export market. It's domestic auto industry is dead without America.
If BYD wants to keep selling in Mexico, it can always ship from Brazil or build factory locally.
New Energy Vehicles (NEVs) in China
- Thread starter supercat
- Start date
If BYD wants to keep selling in Mexico, it can always ship from Brazil or build factory locally.
People might expect Mexico to eventually learn their domestic auto industry can also die if China stop issuing RE export licenses, but that lesson probably can't be learned without a demonstration.
China issued explicit directives to not build factories in countries that tries to use tariffs to force localization, if Mexico wants local factories they just ended that prospect.
Mexico has plenty of local plants for exporting to America. Why do they need Chinese factories?
China can play the RE card with Mexico if it really wants to, but given the large trading surplus China has with Mexico elsewhere, you might not want to deploy it so quickly.
Mexico is, at the same time (1) very real manufacturing powerhouse, and (2) completely tied to US.
If forced, they would stick to US. And if not, they're defenseless and will be easily forced.
Until US stumbles, there's no way out for them. And even if US will, it'll take a very powerful character (of Mao's scale) to get anything positive out of it. Instead, they're most likely will just get dragged down together.
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China doesn't need to play the RE card against Mexico, China can play the RE card against the US, which it has already played and had a 6 month expiration on it for a reason. US can then decide if they want Mexico tariffs more than they want US factories to stay open.
At end of the day if a country fear the stick there are plenty of way to give them the stick.
Because BYD often charges twice the price for export markets. Sometimes more. Even if a lot of that is tariffs, it still helps fatten the profit margin. And guess what, European customers have noticed they are getting fleeced. So BYD is likely upping their international version so they can say "but you are getting a better model so the 2X price is worth it".
This is the paradox of the ruthless efficiency of the Chinese domestic market; there are simply no significant margins. It's a race to the bottom. The major profits lies overseas, and given the slow progress among Western OEMs, I suspect the Chinese carmakers will retain this advantage for years to come. Other Chinese OEMs are looking at this strategy too. Xpeng has already come out saying they are aiming for more than 50% of their total sales to be aimed at overseas.
except that China has a deal with US to continue supply of RE magnets for American companies as long as they are not being used for the military.
US market is far more important for Mexico than the Chinese market.
