This nation is encountering an influx of affordable electric vehicles that may threaten its automotive industry | Carscoops

      Some stakeholders are urging the Brazilian government to expedite higher tariffs to mitigate the influx of Chinese electric vehicles (EVs).

      In the first five months of this year, BYD has imported over 22,000 EVs into Brazil.

      At present, car manufacturers can import thousands of vehicles duty-free.

      BYD has postponed the opening of its planned production facility in Brazil until late 2026.

      The rapid arrival of affordable plug-in hybrids and electric vehicles from China is gaining momentum globally, and Brazil is beginning to feel the impact. BYD, one of the key players in this movement, operates a fleet of large car-carrying ships.

      While the surge of budget-friendly new models has its advocates, an increasing number of Brazilian industry experts are expressing concerns that these imported vehicles could jeopardize the nation’s well-established automotive manufacturing industry, as reported by Reuters.

      Brazil is the sixth-largest car market in the world, making it understandable that companies like BYD want to secure their market share. However, unlike long-standing manufacturers such as Volkswagen, General Motors, and Stellantis, which have dedicated years to establishing factories and generating jobs in the region, BYD and others like GWM and Volvo are bringing cars from abroad, bypassing local production.

      Import tariffs, or the absence of them, are a major factor in why Brazil has become a key market for Chinese automotive brands. A decade ago, the government eliminated tariffs on imported vehicles to boost demand for foreign-built electric vehicles. While it reintroduced a 10% tariff on EVs last year, this is still relatively low when compared to the specific tariffs that Chinese brands encounter in Europe.

      Chinese manufacturers, including BYD, appear to be racing to import as many vehicles into Brazil as they can. Currently, these automakers can import up to $169 million in plug-in hybrid electric vehicles (PHEVs) and $226 million in EVs without tariffs until July 2025. Tariffs are slated to rise every six months, reaching a maximum of 35% in 2026. Nonetheless, some are advocating for the government to accelerate these tariff increases by a year, implementing the 35% rate as soon as possible.

      BYD has brought in around 22,000 vehicles to Brazil within the first five months of this year, and by the end of 2025, up to 200,000 new vehicles from China could potentially enter the country, representing about 8% of all new car sales.

      In terms of local production, BYD has been developing a plant in Bahia, but after reports surfaced last year regarding the poor living conditions of foreign workers, the facility's opening has been postponed to December 2026. Similarly, GWM has also delayed its local production plans by a year.

      “We welcome the entry of new brands into Brazil to foster production, enhance the components sector, create jobs, and introduce new technologies,” stated ANFAVEA president Igor Calvet to Reuters. “However, we are concerned if an overabundance of imports leads to decreased investment in domestic production.”