STORY HIGHLIGHTS

• BYD docks world’s largest car carrier in Brazil with 22,000 Chinese EVs this year alone

• Brazil projected to see a 40% rise in China-built car imports in 2024

• Local industry fears job losses and weakened domestic auto manufacturing

• Pressure mounts on Brazilian government to fast-track 35% import tariff hike

• BYD’s promised local factory delayed to 2026 amid labor probe

• Over 80% of EVs sold in Brazil originate from China

• Brazil seeks balance between green growth and industrial self-reliance

Late last month, a behemoth of the seas—the world’s largest car-carrying ship—pulled into Brazil’s Itajaí port, completing its maiden voyage and drawing attention not only for its size, but for what it carried: thousands of Chinese electric vehicles, part of a sweeping wave of auto exports spearheaded by China’s EV giant BYD. The ship’s cargo could fill 20 football fields—a stark visual of the volume now pouring into one of the world’s most promising auto markets.

Brazil, the sixth-largest car market globally, has quickly become one of the most strategic destinations for Chinese EV makers, and BYD is at the helm of this transformation. But what might appear as a step forward for green mobility is also triggering concerns back home—in Brazil’s factories, union halls, and government offices—about economic displacement, vanishing local jobs, and the long-term sustainability of the domestic auto industry.

A SEA CHANGE IN CAR SUPPLY

In what would have seemed improbable just a few years ago, China has now overtaken Japan to become the world’s top auto exporter. Much of this export surge is powered by surplus production in Chinese factories, particularly from makers like BYD, who have fine-tuned their manufacturing scale to dominate the EV segment globally.

Brazil, with its expanding middle class and increasing environmental consciousness, offers a fertile market. Yet this influx comes with consequences. So far in 2024, BYD has dispatched four major shipments to Brazil, totaling nearly 22,000 vehicles, according to calculations based on shipping data reviewed by Reuters.

As BYD gains market share through sheer volume and low prices, industry veterans in Brazil worry that the local ecosystem—built over decades by manufacturers like Volkswagen, GM, and Stellantis—could be overshadowed or eroded.

AN UNSETTLING ADVANTAGE

Brazil’s relative openness to EV imports—compared to the more guarded stances of the United States and the European Union—has given China a significant competitive edge. While other regions have moved to block Chinese cars through tariffs and restrictions, Brazil, at least until recently, offered low import duties that BYD and other Chinese automakers capitalized on.

For example, in 2015, Brazil lifted tariffs to encourage electric vehicle adoption. Though a 10% import duty was reintroduced in 2023, it is set to gradually rise to 35% by 2026. That slow approach, labor leaders argue, gives Chinese companies too much breathing room to flood the market, undermining local manufacturing before it can fully catch up.

Aroaldo da Silva, president of IndustriALL Brasil—a confederation of industrial unions—puts it bluntly: “Countries around the world started closing their doors to the Chinese, but Brazil didn’t. China made use of that.”

Industry groups like ANFAVEA are now urging the government to accelerate the tariff hike timeline by at least a year, warning of cascading risks to Brazil’s industrial base.

POLICY GAPS AND QUOTA WINDFALLS

Chinese manufacturers are also taking advantage of Brazil’s incentive quotas that allow duty-free imports of up to $169 million worth of plug-in hybrids and $226 million in fully electric vehicles through mid-2025. This has encouraged Chinese automakers to front-load shipments to extract maximum benefit before the window closes.

The Ministry of Development, Industry & Foreign Trade told Reuters that the quota and tariff schedules were designed to support companies as they implement their local manufacturing strategies. But many in the domestic sector say those investments are being delayed or de-prioritized.

BROKEN PROMISES OR DELAYED PLANS?

Back in 2023, BYD’s announcement that it would buy a defunct Ford plant in Bahia and convert it into a green car production hub was hailed by Brazilian officials as a sign of industrial revitalization. The plant was expected to help transition Brazil toward cleaner technologies while creating much-needed jobs.

But progress has stalled. A local investigation into labor practices at the construction site has pushed the plant’s operational timeline to December 2026. Meanwhile, union leaders say there is no sign of supplier engagement or technology transfers—critical components of a healthy local industry.

“Even if the factory is here, what value is it really adding if the components, development, and technology all come from abroad?” asked da Silva of IndustriALL. According to him, such setups risk making Brazil a mere assembly point, rather than a true production center.

THE CHINESE PRESENCE WIDENS

BYD is not alone in its push. GWM, another major Chinese EV player, also delayed its plans to start production at a former Mercedes-Benz facility. It now expects to begin operations this year. Ricardo Bastos, GWM Brazil’s director of government relations and president of the EV association ABVE, confirmed that GWM is negotiating contracts with about 100 Brazilian suppliers.

“This year, imported cars will coexist alongside cars produced in Brazil,” Bastos said, presenting a more optimistic picture of Chinese-Brazilian cooperation.

Yet, the gap between intent and execution remains. As imports swell, the promise of long-term manufacturing partnerships and technology sharing continues to hang in the balance.

BRAZIL AT A CROSSROADS

Brazil’s dilemma is complex. On one hand, Chinese EV imports are helping the country kickstart its transition to greener vehicles. With over 80% of Brazil’s electric car sales currently sourced from China, it’s clear the market would struggle without them.

On the other hand, Brazil’s long-standing goal of industrial self-sufficiency and job creation is under threat if foreign players dominate sales without building meaningful local capacity.

With COP30—the major global climate summit—scheduled to be hosted in Brazil this November, the Lula government is under pressure to show progress on both fronts: sustainable innovation and domestic economic revival. It will need to decide whether to double down on trade liberalization, or erect stronger barriers to protect its budding auto industry.

For now, the tides continue to bring in ships full of promise—and questions. As Brazil leans further into the EV age, it must determine whether it’s steering the wheel, or merely being taken along for the ride.

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