BYD takes aim at US market, evaluating EV plant in Mexico

Chinese battery and electric vehicle powerhouse BYD is preparing to set up an EV factory in Mexico, the head of its Mexican operations told reporters.

The company has launched a feasibility study for the proposed plant, and is currently negotiating with Mexican officials over the terms of the investment and the location of the unit.

BYD will use the plant as an export hub to enter the US market. Mexico's auto manufacturing industry is well integrated with its US counterpart, making it an ideal location for carmakers looking to serve the American market. Mexico is already home to plants belonging to BMW, Volkswagen, Mercedes-Benz and Toyota. Even Tesla has a gigafactory coming up.

BYD's plans are likely to make US carmakers nervous. Top executives from Ford in the US and Renault in Europe have warned that the Western car industry is unprepared for a "Chinese storm" in EVs, and Tesla CEO Elon Musk last month said Chinese automakers could "demolish" global rivals without trade barriers.

The Alliance for American Manufacturing, a leading advocacy group, agrees. Reuters reports that a forthcoming report from the group says: "The introduction of cheap Chinese autos – which are so inexpensive because they are backed with the power and funding of the Chinese government – to the American market could end up being an extinction-level event for the US auto sector."

Analysts estimate the Chinese EV industry's vast scale, coupled with China's traditionally cheaper labor base, allows the country's carmakers to produce an electric vehicle for €10,000 euros less than European rivals.

The country last year overtook Japan to become the world's largest exporter of cars. A year before that, it had overtaken Germany.

Majority of BYD's sales are recorded in China, but the company has been expanding globally, either by setting up plants overseas or increasing exports from its Chinese factories.

The company assembles its cars for the Indian market at a facility in Tamil Nadu and is said to have submitted proposals for set up a manufacturing facility at an investment of $1 billion. In Brazil, the company is spending $620 million on a new, three-part industrial complex coming up on a former Ford facility.

The company, known for its comparatively cheaper models, recently overtook Tesla to become the world's largest EV maker by sales.