Chinese authorities are withholding approval for electric vehicle giant BYD to build a manufacturing plant in Mexico, citing fears that advanced automotive technology could leak to the United States, according to a Financial Times report that cited sources familiar with the matter.
The commerce ministry in Beijing has yet to approve the project over concerns about Mexico’s proximity to the US border, potentially giving American companies unrestricted access to China’s proprietary EV technology, two people with knowledge of the situation said.
BYD, Tesla‘s main global rival, first announced plans for a Mexican manufacturing facility in 2023, projecting it would create 10,000 jobs and produce 150,000 vehicles annually. The company has already established a significant presence in Mexico, selling more than 40,000 vehicles there last year and operating 30 dealerships across the country.
The delay comes amid a broader reshaping of global trade relations as the Trump administration has renewed tariffs on Chinese imports and accused Mexico of being a “back door” for Chinese goods to enter the US market.
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Mexico’s President Claudia Sheinbaum said in November, shortly after Trump’s re-election, that no Chinese company had submitted a “firm” investment proposal to set up operations in Mexico, despite BYD having reaffirmed its intent to invest $1 billion earlier that month.
“The Mexican government obviously would like to get some of the investments [from China], but [its] trading relationship with the US is a lot more important,” Gregor Sebastian, a senior analyst at US-based consultancy Rhodium Group, told FT.
When asked whether US tariffs and Mexico’s tougher stance on China had stalled the company’s plans, Stella Li, executive vice-president at BYD, said the company had “not decided [on] the Mexico facility yet.”
The delay also comes as BYD has experienced setbacks in other international markets. In December, Brazilian authorities halted construction of BYD’s $1 billion development after workers were reportedly subjected to “slavery-like conditions.” The company subsequently fired a Chinese subcontractor.
Beijing is reportedly giving preference to projects in countries participating in China’s Belt and Road infrastructure program, according to sources, potentially complicating BYD’s expansion plans in North America.
BYD continues its global growth trajectory, having sold 4.3 million electric and hybrid vehicles globally in 2024. Earlier this month, the company raised $5.6 billion in a Hong Kong share sale to fuel its overseas expansion.
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