BYD Delays Americas Expansion Due to Trade Uncertainties and Labor Issues

BYD, a prominent Chinese automaker, has announced that it is delaying its expansion plans in the Americas due to ongoing trade uncertainties. The company, which has been eyeing growth in both North and South America, has not specified which markets it plans to target first or the scale of its potential investments. This delay comes as geopolitical tensions and trade policies continue to impact the automotive industry, making long-term planning challenging for carmakers.

Stella Li, BYD’s executive vice president, highlighted the significant impact of geopolitical issues on the automotive sector. She stated that the company is waiting for more clarity before making any decisive moves. This cautious approach is partly due to the 25% tariff on vehicles shipped from Mexico to the United States, a levy introduced under the previous U.S. administration. This tariff has put pressure on automakers, both domestic and foreign, forcing some to pass costs onto buyers or offer temporary discounts. Industry executives have noted that such high tariffs often erode profit margins and complicate long-term planning.

BYD’s delay in expansion is not solely due to trade uncertainties. In December, the company’s Brazil plant project was stalled when Brazilian labor authorities accused the main contractor of keeping more than 160 workers in slave-like conditions, seizing passports, and withholding pay. BYD responded by moving the laborers into hotels and conducting a thorough review of living and working arrangements for subcontracted staff. Reflecting on this episode, Li stated that the company would temper its growth pace, focusing more on local partnerships and slower, more sustainable expansion.

Despite the setbacks in the Americas, BYD is making significant strides in the European market. The company has already moved away from using outside importers, taking charge of its own shipping operations and stocking its showrooms with more affordable, compact vehicles aimed at local buyers. BYD’s executive vice president, Stella Li, has stated that the company is prepared to invest as much as $20 billion in Europe, underscoring its commitment to the region. In China and Europe, companies like BYD, Xpeng, Xiaomi, and Nio have been selling more cars than Tesla by offering lower prices. BYD expects to sell over 5 million cars by 2025 and has already outsold Tesla in European EV deliveries for the first time in April.

In addition to BYD, other Chinese automakers are also facing delays in their global expansion plans. Xiaomi, for instance, has announced that it will not consider exporting its electric vehicles until 2027. The company’s CEO, Lei Jun, stated that Xiaomi must first satisfy high domestic demand for its SU7 sedan and its newly launched YU7 SUV before looking abroad. This decision underscores the need for Xiaomi to fulfill strong domestic orders before stretching its production capacity. The SU7 has outsold Tesla’s Model 3 each month since December, and the YU7 drew heavy orders in the first 18 hours after going on sale, pushing Xiaomi’s stock to a record high.