Chinese EV manufacturers gain strong foothold in South 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 Latin America 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 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 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," Arbache said.

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

"The greater the integration between the region's economies and China's (economy), 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."

Chinese electric vehicle makers are poised to play a leading role in South America's EV market, according to Rodrigo Zeidan, a professor of practice in business 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."

However, affordability gives Chinese automakers a decisive edge, Zeidan said.

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

gaoyang@chinadailyusa.com