The world’s largest electric vehicle (EV) manufacturer is moving ahead with plans to launch a manufacturing plant in Mexico. Even after US President-elect Donald Trump threatened steep tariffs on the country, BYD is still rushing to build the plant despite trade friction with the United States, the largest consumer of Mexican-produced vehicles.
While trade barriers will likely restrain BYD’s access to the US market—at least in the short term—the company’s presence in Mexico isn’t about the United States. It reflects a broader ambition to use EVs to embed the company within Mexico’s critical infrastructure.
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Without a sure export market in the United States, BYD’s ambitions in Mexico could challenge the country’s underdeveloped EV infrastructure. BYD plans to expand auto sales sixfold in the country—but with fewer than 3,000 public charging stations, Mexico needs to invest $1.73 billion annually in its charging infrastructure over the next six years to keep up with demand.
Chinese firms, with their experience building renewable energy infrastructure, are filling this gap—and exploiting an opportunity to expand into Mexico’s critical infrastructure. BYD and partner companies are quickly deploying chargers to support Chinese EV ownership in Mexico. Vemo, a Mexican cleantech company, is actively working with the company to double the number of BYD-compatible chargers in Mexico to 1000 in 2025.
Moreover, Mexico’s grid already faces an energy deficit and will struggle to keep up with rising power demand from EVs. In November 2020, China’s State Power Investment Corporation (SPIC) acquired Mexican renewable energy company, Zuma Energia—now the second-largest private renewable energy producer in Mexico—which is involved in fast-charging facilities, storage, and solar panels. As of September 2024, SPIC reported investments of more than $1 billion in Mexico and expressed its intention to continue expansion in the country.
An opportunity for Mexico
Mexico has much to gain from securing a piece of the EV market. New manufacturing facilities could create high-paying jobs, expand one of Mexico’s main export industries, and attract new investments. Jorge Vallejo, BYD’s general director in Mexico, stated that the new EV plant will create around 10,000 new jobs in Mexico.
Currently, EVs remain out of reach for many consumers. In Mexico, the cheapest Tesla model costs a prohibitive $40,000. However, localizing production could lower prices by reducing transport costs and bypassing tariffs.
Other automakers in Mexico are already struggling to compete with BYD. The Song model, BYD’s $30,000 plug-in sport utility vehicle, is edging out rivals. A local factory threatens to slash prices even lower.
EVs are just the first step
BYD is a risky business partner because of its ability to rapidly integrate itself within a country’s energy system, quickly replacing competitors in not only the EV market, but the larger cleantech industry.
BYD’s goal in Mexico is not just to sell electric vehicles. Similar to how the company has operated in Brazil, first come the EVs—then, BYD provides the manufacturing logistic software, charging systems, storage, and generation needed for the EV ecosystem to operate.
BYD is not just an auto company, it’s a software company, with its own chip-making subsidiary and artificial intelligence (AI) program. The company produces batteries, trucks, skyrails, energy storage systems, digital logistic management software, communication equipment, and 5G and AI technology. BYD uses this expertise to vertically integrate itself into a country’s energy system, allowing it to dominate large parts of the green economy.
In Brazil, where Chinese brands have a 9 percent share of new car sales, BYD builds electric buses, operates solar farms, supplies trains, partners with lithium miners, and manufactures consumer EVs. For BYD, EV production is a beachhead for gaining access to broader energy infrastructure, creating dependency on Chinese technology and investment to support the very industries Chinese companies help establish.
In Mexico, China’s footprint in the energy system is growing. In 2023 alone, Chinese companies announced over $12.6 billion in infrastructure projects in Mexico, focusing on EVs, mining, transit, container ports, and telecommunications. China-based miner Ganfeng has also been involved in a years-long dispute with Mexico over the rights to mine lithium in the Sonora desert.
The party’s favors
BYD’s rise in Mexico comes at a time when Chinese companies are under scrutiny for unfair trade practices, supply chain meddling, and security concerns, which have prompted several Mexican states to dial back tax and resource incentives for BYD.
But this means little for a company that is essentially at the service of the Chinese Communist Party (CCP). Since the late 1980s, China’s Go Out policy has encouraged investment abroad to obtain domestically scarce strategic resources. By acting as a key player in the CCP’s economic efforts, BYD gains unfair advantages in an increasingly competitive global automobile market. High subsidies, strong domestic policy support, and access to military intelligence that could guide transnational business decisions give BYD the competitive edge needed to make it one of the top-selling automakers in the world.
BYD’s ties to the CCP run deep: it has supported China’s military-civil fusion strategy, integrating defense and civilian research to bolster national objectives. In 2019, the company received a prestigious state award for contributions to military technology and has developed at least three military-civil fusion enterprise zones focused on research and development in the defense industry, as directed by the military.
BYD’s leadership maintains an extensive interpersonal network—and even a revolving door—with CCP leadership. BYD founder Wang Chuanfu has held a number of CCP posts, including as a delegate to the People’s Congress of Shenzhen from 2000–2010.
Perhaps uncoincidentally, BYD is also one of China’s most heavily subsidized companies. In 2022, BYD received $2.1 billion in direct subsidies from the Chinese government, significantly higher than other domestic manufacturers. These subsidies help BYD’s expansion efforts, especially as countries concerned with Chinese influence impose tariffs on Chinese EVs.
BYD did not become the world’s largest EV manufacturer by mistake. The CCP has called on BYD to “go out” and conquer foreign markets, and it has supported the company’s efforts through military collaboration, funding, and heavy subsidies. This intense collaboration has made it difficult to differentiate BYD’s corporate strategies from government orders.
A larger prize at stake
Through its vertically integrated approach—from electric vehicles to renewable energy infrastructure—BYD not only captures market share, but also secures lasting influence over the systems driving Mexico’s clean energy transition—to the geostrategic benefit of Beijing.
China’s expansion into Mexico’s EV market, led by BYD, is more than just a response to rising local demand for affordable electric vehicles. It is part of a wider strategy to embed Chinese influence in Mexico’s broader energy and infrastructure systems—and signals a much deeper geopolitical play.
Mexico’s demand for EVs is quickly growing—and BYD’s potential to dominate the market is undeniable. The rapid vertical integration of Chinese firms into sectors needed to support EV adoption can leave Mexico increasingly dependent on China for critical energy and industrial systems.
As Mexico looks to capitalize on the EV boom, policymakers must weigh the long-term trade-offs of Chinese partnerships. While BYD promises immediate economic benefits, the country risks ceding control over strategic assets and becoming overly reliant on Chinese technology and investment.
For Mexico to achieve sustainable, independent growth in cleantech, it must balance foreign collaboration with efforts to strengthen its own domestic capacity and regulatory oversight.
Haley Nelson is assistant director at the Atlantic Council Global Energy Center.
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Image: BYD Auto manufacturing plant in Thailand. (iMoD Official, Wikimedia Commons) https://commons.wikimedia.org/wiki/File:BYD_Auto_(Thailand)_Co.,_Ltd._manufacturing_plant_assembly_line.png