Chinese electric vehicle (EV) manufacturer BYD has announced plans to invest 3bn reais ($620m) in a new Brazilian manufacturing hub. The plant will be opened in a former Ford factory as EV competition between the US and China continues.  

The industrial complex will have enough production capacity for 150,000 electric cars per year and will be the company’s first plant outside of Asia. 

The new development is part of BYD’s efforts to improve its presence in South America. The complex will be built in the north-eastern state of Bahia, in the town of Camaçari, on the site of a former Ford plant that closed in 2021. 

The complex will be made up of three factories, one of which will be used for the processing of lithium and iron phosphate mined in Brazil. The other two will be used to manufacture hybrid and electric cars, trucks and buses. 

Brazilian President Luiz Inacio Lula da Silva has welcomed Chinese investment in the country. During a state visit to Beijing in April, the President sought to “relaunch” relations between the two countries.  

China is a major export market for Brazil. According to government statistics, in 2022, China imported more than $89.7bn (648.97bn yuan) in Brazilian products, especially soy and ores, and exported almost $60.7bn to Brazil. Trade between the two countries has increased 21 times since Lula’s first visit to China in 2004. 

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Brazil is the largest recipient of Chinese foreign investment in South America. In April, Brazilian officials offered financial incentives to BYD as talks stalled over the Ford plant. 

China and US compete over EVs  

The US and Chinese EV industries are in fierce competition. In Asia, BYD sells more EVs than US giant Tesla but seeks to challenge Tesla’s dominance worldwide. 

On 6 July, Tesla and major Chinese EV manufacturers pledged to maintain fair competition and pricing as a price war over the course of this year prompted extremely low vehicle prices

Ford made the decision in 2021 to cease manufacturing in Brazil, closing multiple plants. Ford was required to pay $495m to the state of Bahia for the closure of the plant.  

Ford has centred much of its manufacturing in the US where EV manufacturers are entitled to certain tax exemptions under President Biden’s Inflation Reduction Act.