In late May, the world’s largest car transport ship made its first stop at the port of Itajai in Brazil, carrying thousands of Chinese-made electric vehicles, with most coming from China’s largest new energy vehicle manufacturer, BYD. However, this massive vessel did not receive a warm welcome from the Brazilian automotive industry and unions, instead sparking concerns among them.
According to Reuters, BYD has been actively using its own fleet to transport low-cost vehicles overseas in recent years, with Brazil being a key target market. Statistics from Reuters show that four batches of BYD vehicles have arrived in Brazil this year, totaling approximately 22,000 vehicles. It is expected that by 2025, vehicle imports from China will increase by nearly 40% to reach 200,000 vehicles, accounting for about 8% of the country’s light vehicle registrations.
Brazil’s automotive industry and labor organizations are concerned that Chinese car manufacturers are taking advantage of the current window where import tariffs have not been fully raised to dump vehicles in large quantities, without investing in local production facilities and job creation. They are calling on the government to increase the import tariff on electric vehicles from the current 10% to 35% a year earlier to accelerate industry protection.
Aroaldo da Silva, President of the union alliance IndustriALL Brasil, bluntly stated, “Countries around the world are beginning to close their doors to China, only Brazil is not doing so, and of course, China will take advantage of that.”
Brazil is becoming a controversial focal point for the global expansion of the Chinese automotive industry. With overcapacity in Chinese factories, car exports have significantly increased in the past five years. This surplus capacity is now flowing to Europe, Southeast Asia, Latin America, and other regions.
Facing a fierce price war in China’s domestic market, where entry-level models like the “Seagull” from BYD are priced below $10,000, profit margins have been greatly squeezed. In overseas markets, various countries have erected trade barriers against Chinese cars, with the EU imposing a 45.3% tariff and the US over 100%, while also banning Chinese cars from using Chinese software.
Despite taking certain protective measures over the years, Brazil’s response speed and intensity are clearly lagging behind other countries. In 2015, to promote electric vehicles, Brazil exempted manufacturers like BYD from tariffs, but since last year, the 10% rate has been reinstated, with plans for biannual increases leading to a 35% rate by 2026.
BYD announced in 2023 its acquisition of an old Ford plant in the state of Bahia, Brazil, with plans to start production in 2024. However, due to labor violations during construction, full production has been delayed until the end of 2026. Another Chinese company, Great Wall Motors (GWM), has also seen delays of over a year in its plant construction in Brazil, without starting official production.
Igor Calvet, President of the Brazilian Association of Vehicle Manufacturers (ANFAVEA), told Reuters, “We welcome new brands setting up factories in Brazil to drive the component industry, create jobs, and promote technology exchange. However, if excessive imports lead to a reduction in local investment, it is worrisome.”
Unions criticize BYD for not establishing a local supply chain so far, questioning how much real value its investment in Brazil can bring to the local economy. BYD did not respond to Reuters’ request for comment.