Credit: Visual China

BEIJING, July 6 (TMTPost) —— BYD will build three plants in Brazil to produce new energy passenger cars, process lithium iron phosphate materials, and produce electric buses and truck chassis, which are expected to be put into operation in the second half of 2024, according to the announcement made by BYD on Wednesday.

The passenger car plant will be BYD's second overseas passenger car plant and also the first passenger car plant in South America, with an annual capacity of 150,000 units.

BYD's first overseas passenger car plant is located in Thailand. BYD Thailand Ltd. signed a contract with WHA Weihua Group Volkswagen Ltd. in September 2022 to build an 875,000 square meter passenger car plant, with an annual capacity of approximately 150,000 units. It is expected to be put into operation in 2024.

The three plants are all located in the state of Bahia in Brazil, with a total investment of R$ 3billion (approximately $609 million). BYD negotiated with Ford and the local government in 2022, but no development was disclosed. Brazil's president Luiz Inacio Lula da Silva stated that he welcomed Chinese companies to invest in Brazil and assist Brazil in its low-carbon efforts during his visit to China in April 2023.

As the sixth-largest auto market in the world, Brazil has attracted the attention of Chinese  car companies. Chery Automobile built a vehicle plant in São Paulo State, Brazil, as early as 2011, with an annual capacity of 150,000 vehicles. Great Wall Motor acquired the Mercedes-Benz plant in São Paulo State, Brazil in 2021, to produce new energy passenger cars. According to the Brazilian Association of Automotive Vehicle Manufacturers (ANFAVEA), more than 2.1 million new cars were sold in the Brazilian market in 2022.

However, Brazil's car market is still dominated by European and American car companies. The companies with the highest market share in 2022 were Fiat Chrysler, General Motors, and Volkswagen, with a combined market share of 56%. In addition, the growth of new energy vehicle sales in Brazil is still in an early state. Public information shows that over 10,000 plug-in hybrid cars were sold in Brazil in 2022, and over 8,000 pure electric cars were sold.

The COVID-19 pandemic dealt a huge blow to the Brazilian auto market. Considering the sluggish economy, the Brazilian government is eager to revive the local auto industry. Data from the ANFAVEA shows that Brazil's car sales in 2022 were way below the figure of 2.79 million units in 2019.

According to Brazilian media, Lula said in March 2023 that Brazil must stop importing a large number of cars and increase local car production. The capacity utilization rate of the Brazilian automotive industry was only 50% at that time. The Brazilian government introduced tax breaks in May for models priced under 120,000 reais (about $24,365), which is expected to reduce the price of some models by 11 percent.

In addition to making cars in South America, BYD but also focus on mines, in line with the company's tradition of vertical integration in the supply chain. BYD's Executive Vice President Li Ke revealed in a media interview in early July 2023 that the company plans to build a lithium iron phosphate plant in Chile, which is currently in the site selection phase and is scheduled to be put into operation in 2025.

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