Mexican Standoff for Asian Automakers

Well, as both Tesla and Rivian demonstrated, it can be a lot more financially beneficial to buy an existing plant than build one from the ground up. Now, the Nissan-Mercedes jointly-run plant in Mexico is up for sale, with three bidders.

You’ll recall BYD (who sold about 80,000 vehicles in Mexico last year, or about 5.3% of the market) began talking about building a plant in Mexico back in 2024. Then they said they’d wait until the election, and then the Financial Times reported last March the Chinese government was holding things up, concerned that Mexico (and, theoretically, the US) would “gain unrestricted access to BYD’s advanced technology and know-how”. If you do the research and the math, you’ll see the plant for sale has an annual capacity of 230,000 units — allowing BYD the capability to export up to 150,000 vehicles. For reference, that’s about 50% more than the number of Mitsubishis sold in the US last year. Of course, BYD could also focus on simply building up their Mexican market share and avoid the current 25% tariff that would be imposed on US-bound cars.

Geely, in contrast, sold only 22,000 vehicles in Mexico last year, but that was a 237% jump — so a plant that size would afford them a significant jump in volume. Of course, they also have the Volvo plant here in the US, which would allow them to build cars for the US market without huge tariffs — and, having already said they won’t be announcing a US strategy for 2–3 years, a Geely presence in Mexico might be for other markets besides the US.

The third player, VinFast, has been struggling in the US and is looking to other markets for volume, and it’s not clear if they’d be able to fill this plant based on their current trajectory. They are reportedly still planning to open a US plant in 2028 as they look for equity backers, so this move seems like a bit of a long shot for them.

Stand by to see how this shakes out…

#geely #byd #china #automotive #autoperspectives #vinfast