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Are Chinese Electric Cars Gearing Up to Enter US Market?

As demand for electric vehicles continues to grow globally, Chinese EV makers are exploring pathways to enter the lucrative US auto market. According to unnamed sources cited by The Financial Times, three major Chinese companies – MG, BYD, and Chery – are evaluating potential sites to build manufacturing plants in Mexico. 

Utilizing Mexico as an export hub would allow these companies to capitalize on well-established supply chains and trade networks for shipping vehicles to the United States. Historically, Mexico has been a major source of imported cars for the US due to the friendly trade relationship between the two countries. 

BYD Factory

However, Chinese investment faces scrutiny from US officials who have raised concerns with their Mexican counterparts. Despite these political barriers, the cost and logistics benefits make Mexico an attractive launch point.

In the EV space, Chinese manufacturers are looking to make inroads against market leader Tesla. In Q4 2023, BYD reported record sales of 526,000 battery-powered vehicles globally. Over the same period, Tesla produced approximately 495,000 vehicles and delivered over 484,000. 

For full-year 2023, Tesla holds the edge but BYD continues to gain share. Tesla sold 1.81 million vehicles globally, while BYD delivered 1.58 million fully electric cars. With other Chinese companies like MG and Chery continuing to expand, the US auto landscape may soon feature affordable Chinese-made EVs offered as alternatives to Tesla’s premium-priced models. Although, if Congress has its way with taxes and duties, Chinese EVS won’t be cheap.

Mexico represents the most viable way for these ambitious Chinese brands to enter the US in the near term. Can they capture significant market share on Tesla’s home turf? Barring any significant declines in the quality, innovation, or affordability of Tesla’s vehicles, the company should remain the key player in the EV space.

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