Mexico‘s New Tariffs Threaten EV Giants Tesla and BYD
Mexico City – A proposed surge in tariffs by mexico on automobiles and imports from China and other Asian nations is poised to considerably impact the electric vehicle (EV) market, with Tesla (TSLA) and BYD (BYDDF) expected to bear the brunt of the changes. The proposal, currently awaiting Congressional approval, would raise tariffs to 50%, a substantial leap from the current range of 15% to 20%. China’s Ministry of Commerce has already issued a warning of potential retaliatory measures.
While the move aims to protect domestic industries,the structure of the tariffs disproportionately affects newer entrants like Tesla and BYD,while largely shielding established automakers with existing Mexican manufacturing facilities.
How the Tariffs Work - and Who’s Protected
A 2003 decree allows automakers with production plants in Mexico to import a certain percentage of vehicles tariff-free from countries without free trade agreements with Mexico – a key benefit for General Motors (GM), Ford (F), and Stellantis (STLA).
However,both Tesla and BYD have recently abandoned plans to establish manufacturing plants within Mexico. BYD paused its factory plans last year,citing concerns over U.S. trade policies under Donald Trump. Despite this, BYD has experienced rapid sales growth in Mexico since entering the market in late 2023, doubling its sales pace in the first half of 2025 to approximately 80,000 vehicles. The proposed tariffs threaten to derail this momentum.
Tesla’s Supply Chain Vulnerability
Tesla is notably vulnerable, as reuters reports that all Model 3 and Model Y vehicles sold in Mexico since mid-2023 have been sourced from its Shanghai factory. While the company may have a buffer in the form of existing inventory, a shift in sourcing to factories outside of China will be necessary to mitigate the impact of the increased tariffs.
“Tesla likely has an inventory of EVs already in Mexico, wich would give it some time to shift its Mexican imports from China to its factories in other parts of the world,” notes Eugenio Grandio, president of the Electric Mobility Association in Mexico.
Wider Implications
The tariff announcement comes at a challenging time for BYD investors, already concerned about the company’s profitability. For both companies, navigating these new trade barriers will require strategic adjustments to supply chains and perhaps, pricing strategies in a key emerging market. The situation underscores the growing complexities of global trade and the potential for geopolitical factors to significantly impact the automotive industry.
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Lucas Fernandez, World-Today-News.com – News Editor & SEO Strategist
