Brazil's chamber of foreign commerce Camex moved up a tariff increase for imported electric vehicles by 18 months and gave a full, six-month tariff break for semi-finished (SKD) and completely knocked-down (CKD) units.
Camex agreed to move up a tariff hike for imported electric vehicles, both hybrid and fully electric, by 18 months. The decision brings forward a 10pc increase to January 2027 from July 2028, increasing the total levies to 35pc.
The chamber also turned down a request from Chinese automaker BYD to decrease tariff rates for SKD and CKD units to 10pc and 5pc, respectively. Semi-knocked down vehicles are partially welded, painted and pre-manufactured overseas, while CKDs are imported as completely disassembled parts and fully assembled in the country of destination.
Brazil imposes the same import tariffs on SKD and CKD units as it does on fully built vehicles: 28pc for hybrid vehicles (HEVs) and 25pc for battery electric vehicles (BEVs). It will unify and raise both rates to 35pc by January 2027.
In a nod to Chinese automakers, however, Camex gave a temporary tariff-break quota for SKDs and CKDs, zeroing import levies for six months, starting as soon as the decision is published in Brazil's official gazette. The quota is worth $463mn and, if exceeded, carmakers begin paying the full rate, which also kicks in after the six-month period.
Auto industry association Anfavea celebrated the decision and suggested that Chinese automakers have unfairly entered the Brazilian auto market.
"The six-month tax-break is the most flexibility that we will accept so that current and future investments in the Brazilian auto market are not put at risk," Anfavea's president Igor Calvet said. "We trust that this matter has been resolved and welcome new carmakers that wish to enter our market in a fair, competitive way."
Neither BYD nor GWM are affiliated to Anfavea. BYD said it will not comment on the matter.
Chinese, 'traditional' automakers skirmish
More traditional automakers such as Volkswagen, Toyota, General Motors and Stellantis wrote a letter to Brazilian President Luiz Inacio Lula da Silva, asking him to not rule in favor of BYD.
The four largest automakers in Brazil — Volkswagen, Toyota, General Motors and Stellantis — wrote to the federal government, asking it not accept BYD's request for a reduction in import tariffs on CKD and SKD units, claiming it would lead to layoffs and financial damage.
"The Brazilian auto market would be rocked if the tariff reduction is granted," the letter reads, accusing Chinese automakers BYD and GWM of dishonesty when they previously claimed they would transition to CKD production within 12 months. "The reduction would leave a trail of unemployment, technological dependence and a general imbalance in the market."
The letter is dated 15 July, but only became public on 28 July. One day later, BYD replied with mockery.
"When a Chinese company comes in with low prices and puts EVs in the consumers' garages, the 'dinosaurs' freak out," BYD said, calling itself a "meteor". "They complain about unloyal competition because nothing is more 'unloyal' than playing the game and losing."
BYD said that its Brazilian factory is progressing as planned and argued that a tariff reduction is justified because assembling SKD and CKD vehicles domestically creates jobs, unlike importing fully built units. The company also claims that it offers competitively priced vehicles, which Anfavea members do not, it said.
"Nothing is more unfair than nationally assembling vehicles in accordance with local laws and delivering a product that the 'local' automakers cannot even dream of offering," BYD said, sarcastically. "Brazilians want to go forward, not move in reverse gear."
