China Delays BYD, Geely’s Expansion, Affecting Mexico

China is delaying approval for overseas manufacturing plans by two of its largest automakers—Geely and BYD—due to growing concerns over technology security and escalating geopolitical tensions, particularly with the United States. The decision has impacted plans to establish car production facilities in Brazil and Mexico, both key regions in the global expansion strategies of the companies.

Geely, which announced a partnership with Renault in February 2024 to use the French automaker's production facilities in Brazil, is still awaiting final approval from Chinese authorities to proceed with further investment in Latin America. The agreement also includes Geely acquiring a minority stake in Renault’s Brazilian operations. While Geely stated that its cooperation with Renault has faced no delays or additional scrutiny, and that its electric vehicles were launched locally within 52 days of signing the agreement, sources familiar with the situation indicated that approval from Beijing is taking longer than anticipated.

Similarly, BYD, China’s leading electric vehicle manufacturer, is experiencing delays in securing approval for its planned plant in Mexico. The company announced its intention in 2023 to build a facility that would employ 10,000 workers and produce 150,000 vehicles per year. BYD had hoped to announce a location by the end of 2024, but sources confirmed to both Reuters and the Financial Times that the Chinese Ministry of Commerce has yet to authorize the investment.

One of the main reasons for the delay, according to people close to the matter, is Beijing's concern that BYD’s advanced smart vehicle technologies could be exposed to the United States due to Mexico’s proximity. “The commerce ministry’s primary concern is Mexico’s proximity to the United States,” said one person familiar with the discussions.

The Chinese state planner has reportedly warned the automakers about risks related to technology transfer, though without providing specific details. A third source noted that China has taken a more cautious approach toward outbound investments by automakers, lengthening review timelines and increasing documentation requirements.

In November 2024, shortly after Trump’s re-election, Mexico’s President Claudia Sheinbaum stated there was no firm investment proposal from any Chinese company for manufacturing in Mexico, despite BYD reaffirming its US$1 billion investment plan that same month.

“The Mexican government obviously wants to attract investments [from China], but its trading relationship with the US is far more important,” said Gregor Sebastian, senior analyst, Rhodium Group.

Sebastian also emphasized that from a business perspective, the lack of a comprehensive local automotive supply chain in Mexico would force BYD to import many parts from China, potentially exposing them to US tariffs. “It doesn’t make business sense for BYD to hasten the construction of a production facility in Mexico at this time,” he said.

“Every day brings new developments, so we just have to do our job… More study is needed on how we can satisfy all stakeholders and improve to deliver the best results,” explained Stella Li, Executive Vice President of BYD, in an interview with the Financial Times. When asked about the status of the Mexico facility, she added that BYD had “not yet decided” on the location.

Despite these delays, BYD sold over 40,000 vehicles in Mexico in 2024 and plans to double its sales and open 30 new dealerships in the country by 2025. The automaker also unveiled its “God’s Eye” autonomous driving system earlier this year, which it intends to integrate across all vehicle models. Meanwhile, BYD continues to expand globally with factories under development in Hungary, Thailand, Uzbekistan, and Brazil, though the latter project also faced a setback in December when construction was halted due to labor violations involving a Chinese subcontractor.