Chinese EV maker BYD eyes state incentives for Mexico plant

By Cassandra Garrison

MEXICO CITY (Reuters) -Chinese electric vehicle maker BYD (SZ:) has narrowed its list of finalists for the location of a manufacturing plant in Mexico down to three states and is reviewing a range of proposed incentives from them, the firm’s country head said on Wednesday.

Jorge Vallejo, BYD’s Mexico director general, told Reuters the company was reviewing the latest proposals by the candidate states, which have offered “many benefits” including fiscal, land, management and preferential pricing incentives.

“A plant is not only about having the space, but the logistics, all the development, urban infrastructure that is generated, water, gas, everything that is needed for an automotive plant,” he said.

“There are many elements, even logistical, that we are analyzing together with them,” he said, adding that the aim remained to identify the location by year-end.

Mexico’s federal government, under pressure from the U.S., is keeping Chinese automakers at arm’s length by refusing to offer incentives such as low-cost public land or tax cuts for investment in EV production, Reuters reported in April, citing Mexican officials.

Vallejo did not name the states offering incentives, though BYD Chief of Americas Stella Li said in May the plant will be centrally located in the country.

Mexico’s northern Nuevo Leon state is an automotive hub, and the location of a proposed Tesla (NASDAQ:) mega-factory. It will also be home to a new Volvo (OTC:) plant, the state’s governor said this week.

Meanwhile, the central Puebla state has long housed production by Volkswagen (ETR:), and BMW (ETR:) makes EVs in the nearby San Luis Potosi.

Vallejo, speaking after unveiling of BYD’s Song Pro plug-in hybrid SUV in Mexico, said that the firm had not yet identified which models would be produced at the Mexico plant.

The plant will produce 150,000 units in its first stage and 250,000 units in its second stage before eventually producing between 400,000 and 500,000 units in a few more years, Vallejo said.

The plant will serve the Mexican market, he reiterated. The company has previously said it was not eyeing an entry to the U.S. market.

BYD executives were hoping to meet with the team of Mexican President-elect Claudia Sheinbaum and the economy ministry in the “coming days” to share plans for the plant, Vallejo said.

The company would “specifically present the manufacturing and marketing scheme, and also to show what BYD can develop at a national level,” Vallejo said.

BYD’s plug-in Song Pro, priced at 599,880 pesos ($31,146.42), aims to further bridge the transition from gas to fully battery powered EVs, a pursuit that has so far seen Chinese automakers come out ahead of their Western counterparts.

($1 = 19.2600 Mexican pesos)