One of the potential decisions that Mexico is considering is the imposition of a 50% tariff on vehicles that are imported from countries with which there is no free trade deal. This measure would directly affect cars made in China and would cause a good shake in the local electric vehicle market. The said plan is the most threatening for BYD and Tesla, as both of them are extremely dependent on the factory in China from where they import to Mexico.
If the costs skyrocket, the dominant position of BYD, which sold about 40,000 vehicles in Mexico last year—nearly half of the EV and plug-in sales—would be at stake. Besides BYD, Tesla is also at risk, as the Shanghai-built Model 3 and Model Y that are currently sold in Mexico may quite under the new regulations become far less competitive.
In contrast with the above, American automakers such as General Motors, Ford, and Stellantis are hardly affected. These companies are the beneficiaries of a 2003 decree that caessigthe n conditions are not met, they have the right to import a percentage of cars tariff-free if they keep production in Mexico. In such a case, the protection they have now would let them take a prominent lead in the market if the new tariffs are put into force.
The issue is still in the hands of the deputies, but the ruling Morena party, with a majority in the chamber, can let it pass. The EV cartel would feel it as a big move from Mexico, which would make them either turn towards local production or change their supply chains. The consequences may shake the competitive dynamics of one of the fastest-growing EV markets in the Americas.
