According to Bloomberg, Chinese car companies such as BYD are considering abandoning the U.S. market before facing more restrictive measures.
On August 16, 2022, the President of the United States signed the “Inflation Reduction Act (IRA)”, which aims to promote domestic electric vehicle manufacturing in the United States through tax incentives and financial support and exclude China from the U.S. electric vehicle supply chain. Its preference for U.S. automakers and supply chains has made it too expensive and inappropriate for BYD to operate in the U.S. passenger car market.
After the bill was signed, BYD Executive Vice President Li Ke once said that the IRA may slow down the penetration rate of electric vehicles in the United States. The IRA will prevent American consumers from purchasing the most “affordable” options, so the U.S. market is not within BYD’s current consideration. .
In recent years, Chinese car companies have successively established factories in Mexico and Brazil. The report pointed out that these car companies mainly target the smaller, profitable and easy-to-enter Latin American market, rather than the United States.
Zou Zhou, head of BYD Mexico, said in an interview that BYD is considering building a factory in Mexico. Overseas production is crucial and Mexico is an important market with huge potential, he said. BYD expects to select a site for the factory by the end of the year, which will have an annual production capacity of 150,000 vehicles.
It is noticed that BYD has successively launched Han, Tang, ATTO 3, Dolphin, Seal, Song PLUS DM-i and other passenger car products in the Mexican market, as well as some pure electric bus vehicle and chassis products.
BYD’s cash reserves increased eightfold from the end of 2019. BYD’s net profit from bicycles was negative before 2021. By the fourth quarter of last year, it could already make a net profit of 9,000 RMB for each vehicle sold.
Unlike BYD and other Chinese companies, after the release of the “Inflation Reduction Act”, South Korea wanted to unite with the European Union to oppose the U.S. Inflation Reduction Act and suppress American electric vehicles, but in the end they chose to compromise. Kia, a subsidiary of South Korea’s Hyundai Motor Group, is expected to start operations this year Starting to produce electric vehicles in the United States to obtain partial electric vehicle tax credits.
