Biden’s leadership is concerned about the “impending wave” of Chinese battery factory construction in Mexico, which could further escalate the U. S. -China industrial war.
Chinese corporations MG, BYD and Chery explored sites in Mexico and spoke with officials, according to a Financial Times report. MG plans to build a $2 billion factory, while BYD is rushing to make millions of dollars worth of investments in its own factory. An unnamed Chinese company is also building a $12 billion battery factory, according to the Financial Times, which “concerns” US officials. BYD recently met with ministers from at least 4 Mexican states, and the governor of Nuevo León, the state where Tesla plans to build its gigafactory, said BYD is building a factory there, according to reports. Mexico, however, finds itself in a delicate balance between a tempting flow of Chinese investment and the threat of antagonizing its North American neighbor, according to the report. Mexico is already the second largest importer of Chinese cars after Russia. According to El País, the purchasing company LGS reports that in the last year, Mexico purchased 260,000 Chinese vehicles. But, obviously, what is at stake is much more than simply expanding sales in Mexico. Mexico, the world’s seventh-largest auto-producing country, is well positioned to take advantage of the global supply chain disruptions caused by the COVID-19 pandemic and the ever-escalating US industrial war. United States and China. Cheaper labor, a “large-scale automotive supply chain” and access to North America’s flexible CUSMA industrial agreement sweeten the picture, according to the report.
According to the Financial Times, 4 Chinese electric vehicle brands are considering setting up shop in Mexico. Meanwhile, the U. S. and Europe are imposing strict limits on Chinese-made cars, along with investigations into discriminatory subsidies in China. The U. S. Inflation Reduction Act hopes to curb Chinese market dominance by imposing tighter restrictions on Chinese-made electric cars, batteries and other parts, and making a cash investment in construction its own supply chain. If Chinese automakers build in Mexico, that will put the brakes on the plan, as China can compete and perform better with high-quality electric cars at lower prices.
Last month, members of Congress wrote a letter to U. S. Trade Representative Katherine Tai expressing their concerns: “We are involved in how the People’s Republic of China (PRC) is preparing to flood U. S. and global markets with automobiles, especially electric cars. electric cars (EVs), supported through large subsidies, long-standing localization, and other discriminatory policies. The U. S. has said it is not seeking to block Chinese investment in Mexico, but is running to enforce industrial regulations between the two countries.
Jennifer is an editor at France-based Electrek, previously working at Wired, Fast Company, and Agence France-Presse. Send them comments, suggestions, or recommendations via X (@JMossalgue) or jennifer@9to5mac. com.