Chinese EVs gain in S. America

Chinese automakers are gaining ground in South America, where affordable electric vehicles and new factories are reshaping the region's auto industry and opening the door to greener mobility.

Chinese automakers expanding into South America are being welcomed for bringing fresh investment and competition, but the long-term benefits will depend on how much value is added locally, said Jorge Arbache, a professor of economics at the University of Brasilia.

"The region benefits from new industrial investments, technologies and increased competition," Arbache told China Daily.

Governments in Brazil and Argentina are encouraging foreign manufacturers as part of efforts to modernize their auto industries and cut emissions.

Recent reports said Chinese electric vehicle giant BYD has registered a local unit in Argentina as a car manufacturer.

According to the filing with the country's Justice Ministry, the new entity, BYD Auto Argentina SAU, is authorized not only to import and sell cars but also to manufacture and maintain vehicles, batteries and auto parts.

China Daily sought comment from BYD but did not receive a response.

Chinese automaker Great Wall Motors officially launched its first manufacturing facility in the Americas on Aug 15 in Brazil, with President Luiz Inacio Lula da Silva attending the ceremony.

Lula praised China for creating jobs and urged more of its companies to expand operations in Brazil.

"The GWM Brazil plant is very important for Brazil's national industry. This means creating jobs, increasing income and enhancing professional expertise for Brazilians," Lula said.

He also called on Chinese carmakers to use Brazil as a regional hub. "The Brazilian government stands ready to support businesses and welcomes more Chinese companies to invest here," he said.

The new facility is GWM's first plant in the Southern Hemisphere and its third full-scale production site outside China. The site spans 1.2 million square meters, with 94,000 square meters of built area.

"The Brazil plant is not only a strong commitment to the Brazilian market, but also the starting point for building the future together with our Latin American partners," said Mu Feng, CEO of GWM Global.

"The mentioned investments are welcome. They will be even more welcome if they truly add value and establish supply chains in the region," Arbache said.

"The governments in the region are eager for investments and for reducing emissions. This helps explain the industrial policies that support new investments in the automotive sector," he said.

A key question is whether the region can capture more of the value from the fast-growing electric vehicle industry.

"Value chains are still predominantly Chinese, and the region still contributes only a small share of value-added," he said.

"The greater the integration between the region's economies and China's, the greater the sharing of interests and cooperation will be," he said.

Arbache noted that Chinese investment could generate more jobs and skills if local workers were more deeply integrated into advanced roles.

"There could be even greater benefits by incorporating more local workers into managerial and higher-level positions," he said. "Workforce training and technology sharing are fundamental elements for a stronger cooperation."

Asked about whether Brazil and Argentina might use industrial policy to more openly support Chinese electric vehicle makers amid rising US tariffs, Arbache said it was too soon to tell.

"It is still too early for a clear stance, but the trend is that the countries in the region will seek to diversify their trade and investment interests," he said.

Chinese electric vehicle makers are poised to dominate South America's EV market, according to Rodrigo Zeidan, a professor of economics and finance at New York University Shanghai.

"There is a lot of potential, but the main barrier is infrastructure," Zeidan told China Daily.

"In China, infrastructure was developed even before the explosion of EV producers; in South America, there are severe obstacles to widespread and efficient infrastructure investment.

"Thus, markets are limited to the largest urban centers currently, as we can't expect significant infrastructure investment in the region," he said.

Zeidan said affordability gives Chinese automakers a decisive edge.

"Chinese producers don't have legacy costs and are much more efficient," he said.

But he said that Chinese investment may not bring large benefits to local economies unless companies commit to building at scale.

"Electric cars is not a magical technology impossible to replicate locally. It is all about the volume of local investments," he said.

"If Chinese companies invest a lot, they will create new jobs, as many jobs are lost to competitors," he said.

On the competitive outlook, Zeidan predicted a sweeping change. "They will dominate the EV segment, likely in its entirety," he said. "Whether local governments will allow EVs to replace fossil fuel cars is the one-million-dollar question."

"Right now, it is all about affordability," Zeidan said. "As Chinese companies climb the technological ladder, they should be able to differentiate themselves."