(ecosundiaries.com) – According to two sources familiar with the situation, China is postponing the authorization needed for Chinese car manufacturers Geely and BYD to manufacture vehicles in Latin America due to increased trade and economic uncertainties caused by U.S. tariffs.
In February, Geely and Renault announced that they had come to an agreement allowing Geely to utilize the French automaker’s manufacturing plants in Brazil and acquire a minority share in Renault’s operations within the South American nation.
In 2023, BYD disclosed its intentions to establish a manufacturing facility in Mexico, and they mentioned earlier this year that they would reveal the location of the factory before the close of 2024.
However, obtaining approval from Beijing has been more delayed than expected for both initiatives. A representative from China’s state planner informed the delegates associated with the car manufacturers about potential technology transfer risks inherent in these proposals but did not provide further details, according to those individuals.
Representatives from the nation’s automotive industry groups warned in individual discussions with car manufacturers that President Donald Trump’s tariff plans could introduce unpredictability into international trade and economic conditions. They further noted this might complicate the assessment of risk versus reward for their investment decisions.
People warned that the talks were still evolving and could be modified.
A third party mentioned that regulators have grown stricter and more cautious regarding investment submissions from Chinese car manufacturers operating internationally; however, this does not mean they will cease processing applications altogether. Instead, the evaluation period has been extended, and companies will be required to provide additional documentation, as noted by the source.
Geely said in a statement that its cooperation with Renault in Brazil had been successful, with no delays or extra scrutiny, noting that its EVs had launched locally this week, just 52 days after the agreement was signed.
BYD, Renault, along with China’s state planning agency, the National Development and Reform Commission, did not promptly respond to requests for commentary.
In March, according to reports from The Financial Times based on unnamed sources, China was postponing the approval of BYD’s manufacturing facility in Mexico because of worries that the electric vehicle company’s technological advancements might be leaked to the United States.
The approval hold-ups coincide with Chinese car manufacturers announcing intentions over the past few years to increase production overseas, particularly as regions like Europe enforce tariffs on vehicles imported from China.
Geely, whose founder also controls the Volvo and Polestar brands, has been looking for alliances to broaden its international presence. Recently, it has collaborated with Renault to manufacture vehicles equipped with Geely’s technology in South Korea.
On Wednesday, Geely introduced the Geely EX5 specifically for the Brazilian market, announcing that sales of this model will commence in July. Initially, these vehicles will be available in 18 cities through a network of 23 dealerships. The company has not provided details regarding when local manufacturing might begin.
Although BYD generates over 90% of its revenue within China, the company has established car manufacturing plants in Hungary, Mexico, Thailand, Uzbekistan, and Brazil to cater to key international markets. Additionally, BYD continues to boost its expenditures on promotional activities outside of China.
(Reported by the Shanghai and Beijing news rooms. Additional reporting provided by Gilles Guillaume in Paris. Edited by Mark Potter.)