China is delaying approval for plans by Chinese automakers Geely and BYD to produce cars in Latin America as U.S. tariffs fuel trade and economic uncertainties, two people with knowledge of the matter said.
Geely and Renault said in February they had reached an agreement for Geely to use the French automaker’s production facilities in Brazil and take a minority stake in Renault’s business in the Latin American country.
BYD announced plans for a Mexican plant in 2023 and said last year it would announce where the factory would be located by the end of 2024.
But approval from Beijing has taken longer than anticipated for both projects and China‘s state planner told representatives at the automakers that there would be technology transfer risks in the plans, without elaborating, the people said.
Officials at the country’s auto industry associations also cautioned in separate conversations with the automakers that U.S. President Donald Trump’s tariffs would create uncertainties in global trade and economies, and complicate the risks and returns of their investments, they said.
The people cautioned that discussions were still fluid and subject to change.
A third source said that authorities had become more strict and cautious on investments by Chinese automakers abroad, but not to the point where they would completely stop accepting applications. The review timeline had been lengthened and they will ask enterprises to submit more materials, the source added.
Geely said in a statement that its cooperation with Renault in Brazil had been successful, with no delays or extra scrutiny, noting that its EVs had launched locally this week, just 52 days after the agreement was signed.
BYD, Renault and China‘s state planner, the National Development and Reform Commission, did not immediately reply to requests for comment.
The Financial Times reported in March, citing sources, that China was delaying approval for BYD‘s Mexican plant due to concerns that the technology developed by the EV maker could leak to the United States.
The approval delays come as Chinese automakers have in recent years announced plans to manufacture more abroad, as markets such as Europe impose tariffs on cars exported from China.
Geely, whose founder also owns the Volvo and Polestar brands, has been seeking partnerships to expand overseas. It has been teaming up with Renault to produce cars with Geely‘s technologies in South Korea.
Geely unveiled the Geely EX5 for the Brazilian market on Wednesday and said the model would go on sale from July, initially in 18 cities with 23 dealerships. It didn’t give a timeline for local production.
While BYD still makes more than 90% of its sales in China, it has been building passenger vehicle factories in Hungary, Mexico, Thailand, Uzbekistan and Brazil to serve its major overseas markets and increasing investments in marketing abroad.
Reuters
