Right now, in the electric vehicle world, all eyes are on China. But they may need to be on America's neighbor to the south more than we think.
It's no secret that Chinese-made EVs are making significant inroads into other countries. What's less known is how popular China's EVs are in Mexico, too. The tough tariffs instituted by the U.S. government keep those cars out of our market for now, but how long can that situation possibly last?
The boom in Chinese cars in Mexico is the focus of a new documentary from MotorTrend, and it's worth watching for anyone interested in where the electric market is going in the next few years.
I'll start by explaining what's going on here. China has spent years and billions of dollars ramping up its homegrown EV industry, to the point where Western and other Asian brands (including even Tesla) are losing ground to players like BYD, NIO, Li Auto, Xpeng and others. That's terrible news for the other automakers' bottom lines; they banked on a rising China to be an almost permanent growth engine for new car sales.
But the Chinese automakers aren't content to just stay in their home market. They're quickly gaining steam in Europe, thanks to their low prices, surprisingly impressive tech and vastly improved quality from the days when they were a joke at our auto shows. And since European buyers are as fed up with high new car prices as we are, can you really blame people for going for a cheap alternative?
Cracking the U.S. market has been a lot harder. The Trump Administration stuck a hefty 27.5 percent tariff on Chinese-made cars, and the Biden Administration kept them in place. That tariff — along with the tough battery sourcing requirements under the Inflation Reduction Act — have made it very difficult for Chinese manufacturers to sell cars here. Plus, many U.S. politicians are allergic to Chinese anything these days; just look at the backlash against Ford's planned CATL battery joint venture in Michigan. Chinese car factories here would likely face insurmountable opposition.
But what's to keep BYD or the rest from building a factory in Mexico and selling North American-made Chinese cars in the U.S.? Right now, basically nothing.
And as MotorTrend journalists Kristen Lee (who, in the interest of full disclosure, is someone I have worked with at The Drive and Jalopnik) and Miguel Cortina discuss here, Mexico is proving to be an increasingly attractive place for China's automakers to build and sell cars. Chery, SAIC Motors, and BYD are looking to build plants in Mexico, the story says. Meanwhile, Mexican buyers are already responding in kind; Chinese imports to Mexico are up a stunning 62 percent this year alone, and according to some estimates, they now make up nearly 20 percent of that country's new car market.
Inside China's EV Surge
That's an almost overnight success story, and it's playing out just south of Texas. But are the cars any good? MotorTrend says yes; they drove the BYD Yuan Plus crossover, which they call a "quality, luxury-focused product." That feels perfectly positioned to be a hit in America. And while the JAC E10X city car feels less destined for America, it proves to be a very solid electric city car.
America's geopolitical tensions with China — which have only gotten worse in recent years — are about the only thing keeping these cars from taking off here. But capitalism, even the Chinese brand of it, finds a way. As one analyst says in this video, those automakers are betting our market will open up sooner or later. And Mexico is quickly becoming a major EV production hub with big players like Tesla and Kia establishing bases there.
Take a look at MotorTrend's latest. You may just be glimpsing into the future of American roads, too.