China’s BYD expands electric vehicle operation in Brazil

Executive Vice President of BYD and the President of BYD Americas, Stella Li poses for a picture during an interview with Reuters in Sao Paulo

By Alberto Alerigi

SAO PAULO (Reuters) – Chinese automaker BYD Co Ltd will start selling two new electric vehicle models in Brazil this month, betting on favorable political and environmental developments in Latin America’s largest vehicle market, the company said.

“I believe now is the right time politically and environmentally for us to invest in building these new technologies in Brazil,” BYD Americas President Stella Li said in an interview during the launch of the two SUV models on Wednesday.

The cars are the hybrid Song and the totally electric Yuan. They will be imported until new factories to make them in the northeastern state of Bahia start operations.

“But it will be a very challenging process and we need a government that has an open mind for technology to grow here,” Li added.

President-elect Luiz Inacio Lula da Silva, who takes office on Jan. 1, has promised to overhaul Brazil’s environmental policies, and his program for the election he won in October calls for industries focused on a “green economy” and the need to modernize the auto industry with hybrid.

In October, BYD signed a letter of intent with the government of Bahia with an eye to setting up vehicle production in the industrial area left by Ford Motor Co when it closed its factory outside the capital Salvador.

The Bahia government said BYD would build electric bus and truck chassis, as well as electric cars and hybrids at three plants with an investment of 3 billion reais ($550 million), and also process Brazilian lithium for vehicle batteries for export to China.

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Two of the plants will go onstream in 2024 and the third in 2025, the Bahia government said at the time.

Li declined to give details and said a decision on the project should be made by the end of this year.

Asked about the risk posed by Brazil’s history of political, economic and legal turmoil, she said BYD “has a lot of patience with Brazil.”

“We have been in Brazil for almost 10 years. We have experienced many political changes in this period, in addition to exchange rate fluctuations, and inflation. But I think that in the long term, Brazil has its own advantages,” Li said.

She cited the size of the Brazilian market, availability of raw material for batteries such as lithium, and a new government that appears to be more open to encouraging the sector.

“We are at a very good moment to start to expand technologies here … and in time Brazil will be able to develop its own industry” for electric and hybrid vehicles, she said.

BYD expects that 10% of all vehicle sales in Brazil will be electric and hybrid models by 2025, compared to the current 2.4%, and the EV market share could jump to 30% by 2030.

Li pointed to the tax burden as one of the main factors behind the high prices of electric and hybrid vehicles in Brazil compared to other markets.

“If you charge high taxes, you kill the baby before it can grow,” she said.

($1 = 5.4487 reais)

(Reporting by Alberto Alerigi; Writing by Anthony Boadle; Editing by Richard Chang)