Mexico Will Hit BYD And Tesla By Imposing A 50 Percent Import Tariff

JAKARTA The giant electric car manufacturers BYD and Tesla are expected to be the party most disadvantaged by the proposed 50 percent increase in tariffs from the Mexican government. The reason is, this proposal is for cars imported from China, the production centers of BYD and Tesla. This policy has the potential to reduce the rapid growth of the electric car market in Mexico, but on the other hand, this proposal will not have an impact on US automakers such as Ford, General Motors, and Stellantis.

Citing a Reuters report on Saturday, September 13, the proposed new tariff, announced last Wednesday, will apply to electric and gasoline-fueled cars imported from countries that do not have a free trade agreement with Mexico. Although the coverage is broad and includes countries such as South Korea, India, Indonesia, and Russia, industry analysts say that this policy will practically target electric cars produced in China. This move is considered a new game that could reshape North America's fast-growing automotive market.

This rate increase is not the first time. Over the past year, Mexico has gradually increased tariffs for Chinese-made electric vehicles, from 0 to 15 percent, and is now proposed to 50 percent.

Eugenio Grandio, president of the Electric Mobility Association in Mexico, called the figure 50 percent "very aggressive" and would be a game changer for the market. This plan still has to be approved by the Mexican Congress, where the ruling party has a significant majority.

Amid this uncertainty, BYD and Tesla's plans to set up a factory in Mexico have also stalled. Tesla suspended construction of its plant in northern Mexico last year citing interest rate pressures and a global economic slowdown. Meanwhile, BYD scrapped its plans to build a factory this year, amid concerns from Mexican authorities that agreeing to a Chinese plant could disrupt trade relations with the US.

Despite the obstacles, BYD has enjoyed tremendous growth since entering Mexico's market by the end of 2023. The Chinese company claims to have sold around 40,000 cars in Mexico by 2024, nearly half of the country's total electric car and plug-in hybrid sales.