Chinese automakers BYD and Great Wall Motors (GWM) are hoping a faster start-up for their new and soon-to-be inaugurated Brazilian electric vehicle (EV) factories will give them leverage to convince officials to lower import tariffs set to rise significantly in coming years.
BYD, which opened its Brazilian factory earlier this month, said it will assemble imported semi-knocked down (SKD) units — vehicles that are partially welded, painted, and pre-manufactured in China — for at least the next 12 months. GWM will follow suit when it inaugurates its plant in Sao Paulo state later this quarter.
Rushing the openings by using SKDs will let both companies speed up hiring at the plants, providing economic benefits to Brazil that they hope will help them lobby for lower import tariffs, according to a market participant close to the companies.
"They want to be rewarded for generating jobs and boosting the Brazilian auto market," a market analyst told Argus. BYD claims that once the factory reaches full capacity in late 2026, it will create 20,000 jobs — revitalizing the job market in a region that previously relied on a decommissioned Ford plant, which BYD now owns.
Both companies plan to eventually transition to completely knocked down (CKD) units next year, which involves importing completely disassembled parts from China and fully assembling the vehicles in Brazil.
Currently, 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 EVs, with plans to unify and increase all levies to 35pc by July 2028.
BYD unsuccessfully asked the government to lower SKD and CKD tariffs to 10pc and 5pc, respectively. In response, the company expedited the opening of its factory — previously delayed — to intensify pressure.
"This approach gives the automakers time to develop a domestic supply chain for the auto parts needed in CKD production and further lower prices, which is BYD's goal," the analyst said, noting that rising tariffs are making more difficult to do so. "Opening the factory is a major vote of confidence in Brazil and they want something in return for that."
GWM is pursuing a similar strategy. Both companies are backed by Brazil's EV association ABVE, according to the analyst.
"ABVE claims that the Brazilian consumer has the right to have technological, clean vehicles," the analyst said. "The body argues that incentivizing domestic EV production takes advantage of Brazil's mostly renewable energy resources to create a greener auto market, which is what the government wants."
The administration for Brazilian president Luiz Inacio Lula da Silva has been pushing a sustainable mobility agenda since the early days of his campaign to win his current team.
The carmakers' push for lower tariffs also has support from some lawmakers, who are working to increase political pressure on the federal government.
As a proposed compromise, BYD is pushing for temporary 10pc tariffs for the next 12 months, covering the period it plans to assemble SKD units.
Still, it will not be easy for the Chinese EV makers. The Brazilian auto industry association Anfavea, is advocating for even higher import tariffs across all vehicle types, arguing that such protection is necessary to protect the domestic industry.
