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Chinese automaker BYD looking for Mexico plant location, executive says

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Adds comments from BYD executive in paragraphs 5-7 and 16-17

By Daina Beth Solomon

MEXICO CITY, Feb 28 (Reuters) -Chinese electric vehicle maker BYD 002594.SZ is looking for a location in Mexico to set up a factory aimed at boosting the company's share of the local market, BYD Americas CEO Stella Li told Reuters on Wednesday.

The company expects to choose a location for the plant, which is set to have a production capacity of 150,000 cars annually, by the year's end, Li said.

BYD outpaced former market leader Tesla in EV sales globally in the fourth quarter of 2023, and auto industry officials say its push into Mexico foreshadows a competitive threat the Shenzhen-based automaker and others from China may pose to companies already operating in the U.S. market.

A U.S. manufacturing advocacy group,the Alliance for American Manufacturing, this month warned low-cost Chinese cars and parts could threaten the viability of auto companies in the U.S. The group called on Washington to block the import of low-cost Chinese autos and parts from Mexico to prevent an "extinction-level event" for the U.S. auto sector.

Li said BYD's Mexico ambitions are solely geared at local sales, adding the company is scouting for factory sites in central and southern areas rather than northern Mexico near the U.S. border, where she said transportation costs to reach consumers would be expensive.

"Our plan is to build the facility for the Mexican market, not for the export market," she said.

When asked whether Mexican officials had mentioned U.S. concerns over Chinese automakers, Li said they had been receptive to BYD's plans.

Analysts say Chinese automakers have been rapidly improving their vehicles and are even moving faster than global rivals in some areas, such as infotainment systems and autonomous driving.

BYD is particularly cost-competitive and aggressive among Chinese players, according to executives from its Chinese rivals already selling cars in Mexico. BYD may bring aggressive price cuts to Mexico, just as it has done in its home market, forcing rivals to slash costs to keep up.

Cost advantages for BYD come from its early investment in EV technology and a high degree of vertical integration the company has achieved over the years, experts say, not unlike Tesla TSLA.O.

Like its American EV rival, BYD produces an array of automotive components and systems on its own, from batteries to motors to power management chips to dashboard screens.

BYD executives announced on Wednesday the automaker will begin selling its Dolphin Mini electric vehicle (EV) in Mexico at 358,800 pesos ($20,990), less than half the price of the cheapest Tesla.

At a launch event in Mexico City, Li said the car aims to mix technology and a price point in reach of Mexican consumers.

"It's affordable ... so every Mexican can bring their first electric car home," she said.

Even as BYD's Mexico sales are doubling monthly, Li also noted challenges for encouraging consumers to adopt EVs, such as Mexico's still-limited network of charging stations.

"We still need a lot of hard work to educate the market."

($1 = 17.0941 Mexican pesos)

Reporting by Daina Beth Solomon in Mexico City; additional reporting by Norihiko Shirouzu, Writing by Valentine Hilaire and Ben Klayman; Editing by Nia Williams, Chizu Nomiyama and Jamie Freed


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