BYD and Geely vie for Nissan-Mercedes Mexico plant

A 12 February Reuters claims that BYD and Geely are among the many finalists vying to buy a Nissan-Mercedes-Benz plant in Aguascalientes, Mexico, as Chinese language automakers search to realize a producing foothold in a rustic the place US tariffs are fuelling manufacturing facility closures and layoffs. Vietnamese electrical automobile maker VinFast rounds out the highest three in a complete of 9 firms, with different events reportedly together with Chery and Nice Wall Motor.

The Aguascalientes plant, which opened in 2017 with an annual capability of as much as 230,000 autos, is shuttering after Mercedes moved manufacturing of the GLB to Hungary the place it might probably export to the US at decrease tariff charges than it might probably from neighbouring Mexico. In the meantime, Nissan is cancelling the slow-selling Infiniti QX50 and QX55 fashions it produced on the facility as a part of a dramatic world restructuring that may also see it shutter a second native manufacturing facility outdoors Mexico Metropolis.

Mexican financial system ministry officers have quietly urged state authorities to stall Chinese language automakers’ investments till the nation completes US commerce talks, two authorities sources instructed Reuters. Mexico imposed 50% tariffs on Chinese language vehicles and different items final yr in an obvious effort to appease the Trump administration, however the import taxes have the secondary impact of incentivising Chinese language automakers to fabricate regionally as a substitute.

A White Home spokesperson stated US commerce limitations are rooted in nationwide and financial safety issues, citing “backed Chinese language overcapacity pushing Chinese language corporations to dump extra manufacturing into different markets”. The US continues to impose duties of 100% on Chinese language-made EVs and different elements, whereas Canada—the one different nation to maintain such a excessive charge—just lately made an allowance to permit as much as 49,000 Chinese language EVs into the nation yearly at a diminished 6.1% charge.

The 9 automakers expressing curiosity within the plant skewed towards hybrid and EV manufacturing targeted on supplying to Latin America, the Aguascalientes state authorities stated with out specifying firm names or origins. Chinese language automakers are required to win Beijing’s approval for abroad manufacturing facility investments, with one supply saying China’s commerce ministry is conscious of the curiosity and has not raised objections to this point.

It must be of little shock that Mexico is more and more amenable to Chinese language automakers, even on the danger of incensing its northern neighbour. The nation’s automotive trade misplaced roughly 60,000 jobs final yr amid tariffs and automaker technique shifts, with automobile exports to the US falling almost 3% in 2025 after three many years of constant development.

BYD had beforehand deliberate to construct a brand new manufacturing facility in Mexico producing round 150,000 autos yearly, however the firm grew weary of the crimson tape required for approval in response to a authorities official aware of the matter. China’s Commerce Ministry delayed approval for the growth in March 2025 over issues that Mexico’s proximity to the US may enable BYD’s superior sensible automotive and electrification applied sciences to leak throughout the border.

The automaker finally deserted the mission in July 2025, citing geopolitical volatility and commerce tensions. Its Latin America technique at present hinges on Brazil, the place it opened its first plant—not with out controversy—in July 2025. Vertical integration can be a key a part of this technique, and the automaker is concentrating on 50% of components used on the Bahia state plant to be sourced regionally by the top of 2026.

Geely introduced in June 2025 it could halt building of recent manufacturing crops globally citing “extreme overcapacity” within the automotive trade. On the time, Goldman Sachs estimated that solely half of China’s 20-million-unit world EV manufacturing capability was truly being utilised. The automaker as a substitute pursued manufacturing partnerships, together with a 26.4% stake in Renault do Brasil to produce autos on the Ayrton Senna manufacturing facility in Curitiba. That deal adopted Geely taking a 34% stake in Renault’s Korean manufacturing facility and making a 50:50 three way partnership for inside combustion engine and hybrid powertrains underneath the Horse model.

Shopping for the Aguascalientes manufacturing facility wouldn’t require Mexican authorities approval, and comes with the benefit of a talented workforce able to go on day one. Transportation infrastructure and approval processes for brand new building would even be non-issues. BYD and different Chinese language automakers collectively boosted their Mexican market share from zero in 2020 to roughly 10% in 2025, in response to AutoForecast Options.