Brazil increases duties on imported electric vehicle components
BYD, a leading Chinese electric vehicle manufacturer, has officially started its vehicle assembly line in Brazil. The new plant, located on the former Ford industrial site in Camacari, was announced in July 2023 and has been under renovation since the acquisition in March 2024.
The plant, with an investment of over BRL 3 billion (approximately US$565 million), is set to reach full capacity by July 2026. Initially, the plant will produce three models: the Dolphin Mini (electric), Song Pro, and King, with additional plug-in hybrid variants planned. The first Brazilian-made electric vehicle, the Dolphin Mini, locally known as Dolphin Mini and marketed as Dolphin Surf in Europe, was rolled out on July 1, 2025.
However, the plant's operations are not without controversy. In early July, four automakers—Toyota, Volkswagen, General Motors, and Stellantis—warned Brazilian President Luiz Inácio Lula da Silva that this move could jeopardize investments in the country. The increased duties on the import of SKD and CKD kits, brought forward by a year and a half, could force BYD to establish full vehicle production in Brazil.
To mitigate this, Gecex, the Brazilian foreign trade secretary, has approved a duty-free quota worth $463 million for CKD and SKD imports. This quota, valid for six months, aims to make new technologies accessible to consumers and strengthen the national production chain. Gecex's aim is to align its tariff policy with the investments expected in the country's automotive sector in the coming years.
It's important to note that BYD is only a vehicle assembly operation, with parts produced in Chinese BYD plants and only assembled in Brazil. Established automakers, on the other hand, have complete vehicle plants in Brazil, including body production, and have invested in these plants, employing many people.
The BYD complex in Brazil includes production of vehicle chassis for buses and trucks, lithium processing, and was announced in 2023. The duty-free quota helps for now, but the model will become less attractive in the long run due to increased duties. As the debate continues, it remains to be seen how this development will shape the Brazilian automotive industry.
Technology plays a vital role in the operations of the BYD plant, as it employs advanced technology in the assembly of electric vehicles. The plants in Brazil and China produce the necessary parts and implement innovative technology in their production processes.
