While the United States continues to restrict market access for Chinese-made electric vehicles, neighboring countries are increasingly embracing affordable, high-quality Chinese electric vehicles.
The latest brand to show interest in entering Latin America's growing EV market is MG Motor, a former British brand owned by China's state-owned SAIC Motor Group that is currently planning to set up a manufacturing facility and research and development center in Mexico.
The Mexican backdoor threat.
American automakers are concerned that cheap, high-quality Chinese-made EVs, already flooding Mexico, will also flow into the U.S. if they build factories here. The U.S. could be a lucrative market for them, but it's not their only interest. They see incomes rising in South and Latin America, too, and plan to expand in those regions despite U.S. protectionist policies.
The company's expansion into Mexico, where it already sells models such as the electric MG4 and hybrid MG3, will “not only enable vehicle production, but also market intelligence specifically designed for Latin America,” country chief Zhang Wei said in a statement.
The company did not provide details on when or where it would build the plant, but said the Mexico plant would help SAIC Group grow and expand into the Caribbean and Latin America. The expansion would also allow MG Motor to launch its premium IM brand in those markets, which the company said is in the plans.
MG Motor already has factories in China, Thailand and India. Additionally, it is the top-selling Chinese brand with sales of nearly 128,000 vehicles in the first half of 2024, according to Dataforce figures reported by Automotive News, and it also plans to build a factory in Europe.
Mexico is emerging as a hotspot for Chinese-made EVs in North America. Brands like BYD and Chery Automobile already sell cars there. Reuters reported that one in 10 cars sold in Mexico last year was made in China. Given the pace of Chinese investment in the country, that share is likely to continue to grow.
Tesla also plans to build a factory in Mexico, but those plans have been put on hold pending the results of November's presidential election.
A Donald Trump election would certainly hurt the U.S. auto industry, as he has pledged to revise the United States-Mexico-Canada (USMCA) free trade agreement and impose tariffs of 100-200% on Mexican-made cars. Many of the cars sold in the U.S. are made in Mexico, including General Motors, Ford, Mazda, Nissan, BMW, and countless other manufacturers.
These cars should be made in the United States, the president said at the Republican National Convention, and indicated he would allow Chinese automakers to set up factories in the U.S. But Mexico has recently distanced itself from Chinese brands and reportedly called off negotiations with BYD under pressure from the U.S.
