The largest Chinese EV company is coming to Canada. Though saw unofficial evidence that BYD was preparing to enter the Canadian market yesterday, today we got an official confirmation, albeit one buried in a different press release.
In a joint press release from Uber and BYD, the companies announced a new partnership to offer Uber drivers discounted pricing and special financing on BYD EVs. That alone is big news, with a goal of bringing 100,000 new BYD EVs onto the Uber network. But in the first paragraph of the release, there was an interesting point about expansion plans (emphasis mine):
Get Fully Charged
China's Global EV Push
China put its full weight behind its EV sector, and that foresight is paying off. Chinese companies make some of the most affordable, advanced, long-rage and innovative EVs on the planet. Europe and the U.S. feel threatened by what they claim are overly subsidized EVs, and have enacted tariffs designed to protect their home-grown automakers from Chinese competition.
Most of that isn't too notable. BYD already offers EVs in the Middle East, Australia and New Zealand. But the company doesn't sell passenger vehicles in Canada. BYD sells busses there, as it does in the U.S., but the company's competitive consumer EVs aren't available up North.
They are on sale in Mexico, however. So BYD clearly has serious intentions for the North American vehicle market, even if a 100% U.S. tariff on Chinese EVs will keep it out of the continent's biggest market. Yet if BYD can establish sufficient production in Mexico or Canada, the company could opt to produce vehicles in either market. Because of the U.S.-Mexico-Canada trade agreement, there are no tariffs on vehicles imported to the U.S. from either market. Importantly, however, vehicles cannot simply be assembled in Mexico or Canada from internationally sourced parts. At least 75% of the value of the vehicle must come from parts and materials sourced from the U.S., Mexico or Canada.
That'd keep BYD from using its considerable Chinese battery supply chains if it wants to take advantage of free trade into the U.S. Building out a North American supply chain will surely be an expensive undertaking for the auto giant, and may reduce its production cost advantage over U.S. automakers.
That big of an outlay could be a risk for BYD, too, as there's uncertainty whether production in Mexico or Canada will be enough to protect it from the scorn of American politicians. The Biden Administration is reportedly pressuring Mexico to refuse to offer incentives to Chinese companies seeking to build factories in the country, per Reuters. These incentives are a staple of deals with other automakers, with Mexico spending big to get companies like GM and Volkswagen to build cars there.
Republican Nominee Donald Trump has claimed that, should Chinese firms attempt to export Mexican-built cars to the U.S., he'll put a 100% tariff on those, too. It's not clear how that would work, though, as the Trump-Administration-negotiated U.S.-Mexico-Canada agreement does not discriminate against goods based on where the company that owns the production facility is based.
Either way, though, it's clear that opposing Chinese EVs is a rare issue where both parties agree. The U.S. government does not want cheap BYD EVs entering its market, even if they're built in North America. But with Mexico already buying BYDs and Canada on deck, American companies are already having to fight with China for marketshare in their own neighborhood. If that causes them to step up their EV game, it'll be a win for everyone. If they choose to hide behind a tariff wall and wait for the craze to blow over, though, it'll be the U.S. that gets left behind.
Contact the author: Mack.hogan@insideevs.com.
