Beijing’s decisions affect Chinese companies’ electric vehicle production plans in Brazil and Mexico amid U.S. tariff tensions.
The rapid expansion of China’s electric vehicle (EV) industry into Latin America has hit a significant speed bump. Two of the country’s most prominent EV manufacturers, Geely and BYD, are facing delays in their international investment projects, particularly in Brazil and Mexico. The delays stem from the Chinese government’s hesitancy to greenlight the overseas expansions due to growing concerns about technology transfer and global trade tensions—especially those involving the United States.
Geely Eyes Brazil Through Renault Partnership
In February 2025, Geely announced a groundbreaking partnership with French automaker Renault to penetrate the Brazilian automotive market. Under the terms of the agreement, Geely will utilize Renault’s existing production facilities in Brazil and take a minority stake in its operations. The move is seen as a strategic step for Geely to fast-track its presence in South America without building a plant from scratch.
Just 52 days after the deal was signed, Geely began selling its electric vehicles in Brazil, signaling strong initial momentum. The company’s EX5 model has officially launched in South America and will be available across 18 cities through a network of 23 dealerships. While the commercial rollout is underway, a concrete timeline for local production has yet to be announced, primarily due to pending approval from Chinese authorities. While promising in scope, the Geely and BYD investments in Latin America are increasingly shaped by decisions in Beijing rather than market demand.
BYD Awaits Green Light for Factory in Mexico
While Geely has taken the partnership route, BYD is pursuing an independent facility in Mexico. The company initially unveiled its plan to build a manufacturing plant in 2023, with site selection expected to conclude by the end of 2024. Mexico’s strategic importance, proximity to the U.S. market, and existing trade agreements like the USMCA make it an ideal hub for BYD’s North American ambitions.
However, the project has hit a bureaucratic roadblock. Sources familiar with the matter say the Chinese National Development and Reform Commission (NDRC) has expressed reservations about the proposed plant, particularly regarding the potential risks of technology transfer. These concerns are likely amplified by the increasingly complex global trade environment and the potential for proprietary Chinese EV technology to be exposed in foreign jurisdictions. This regulatory caution has placed the Geely and BYD investments in Latin America under closer scrutiny, complicating the execution of even well-planned initiatives.
U.S. Tariff Uncertainty Complicates Investments
A significant factor influencing the Chinese government’s slow pace in approving outbound investments is the current trade policy landscape in the United States. Industry sources note that the U.S. government’s reinstatement of 25% tariffs on imported vehicles—initially introduced by former President Donald Trump and maintained in subsequent administrations—is causing unease within China’s automotive sector. Manufacturers are being advised to reassess their international strategies, especially when export routes might lead directly or indirectly to the U.S. market.
Industry associations in China have warned companies that these tariffs pose long-term risks to profitability and operational security. Consequently, Beijing takes a more calculated approach before approving any high-profile overseas projects, including the Geely and BYD investments in Latin America. The unpredictability of U.S. trade policies means that Chinese firms must weigh the benefits of market access against the potential for sudden regulatory shifts.
A Shift in China’s Investment Strategy
While foreign investments by Chinese automakers are not being outright rejected, regulatory authorities have undeniably raised the bar for approvals. A third source familiar with the internal discussions noted that the government has adopted a more rigorous screening process. This includes demanding more extensive documentation and longer lead times for review. The goal appears to be safeguarding critical technology while allowing competitive companies to expand into international markets—albeit under stricter oversight.
This change reflects broader concerns within Beijing over how outbound investments might inadvertently contribute to strengthening foreign competitors or exposing Chinese innovation to unauthorized use. These policy shifts now directly impact the pace and scope of Geely and BYD investments in Latin America, adding complexity to ambitious cross-border ventures.
Global Expansion Under Pressure
The approval delays are critical for Chinese automakers, who are increasingly looking to global markets to offset slowing growth at home and mounting protectionist policies abroad. Geely, for instance, has been aggressively pursuing strategic alliances outside of China. In addition to its deal with Renault in Brazil, the company collaborates with the French firm in South Korea, producing vehicles using Geely’s technology.
Geely’s founder, who owns renowned brands such as Volvo and Polestar, has positioned the company as a global innovator, leveraging partnerships to scale quickly. However, even the most carefully crafted alliances cannot proceed without the blessing of Chinese regulators—an emerging bottleneck in the global expansion of Chinese EV firms.
BYD, which still relies on the Chinese market for over 90% of its total sales, has expanded its international presence. The company has launched or announced EV factories in Hungary, Thailand, Uzbekistan, and Brazil and has invested heavily in branding and marketing outside China. Its proposed factory in Mexico would be a cornerstone of its North American strategy, offering a springboard to the U.S. and Central America. Still, the hold-up in approvals means that BYD’s momentum could be slowed, and timelines may need to be revised.
As Beijing exercises greater control over outbound capital and technology, Geely and BYD investments in Latin America are high-profile examples of the new normal facing Chinese multinational enterprises. The ambitions remain bold, but the execution will depend as much on policy consensus in China as on market opportunities abroad.
In summary, while Latin America continues to be a promising destination for EV expansion, with growing consumer demand and strategic geographic advantages, the pace at which Chinese companies can act is increasingly dictated by internal regulatory dynamics. The Geely and BYD investments in Latin America are emblematic of both the potential and the challenges of global growth in an era of shifting geopolitics and protectionist trade policies.