Chinese electric vehicle (EV) manufacturers, including BYD, are expediting shipments to Mexico and Brazil in anticipation of rising tariffs and potential trade barriers, the NIKKEI Asia reported on Thursday. This follows the US announcement of a 100 per cent tariff on Chinese EVs, signalling a broader crackdown on Chinese electric vehicles by the US and its allies. The rush to move vehicles began in March and is expected to continue through June, according to a shipping industry source familiar with the situation. This surge in demand has caused a dramatic rise in shipping container prices on the China-Brazil route, jumping from around $1,500 earlier this year to over $6,000 currently. BYD, a leading Chinese EV maker, saw its exports surge over 150 per cent year-on-year in Q1 2024, with Brazil accounting for a significant portion (16 per cent) of the 97,000 vehicles shipped. To seize opportunities in Brazil's growing market, BYD is fast-tracking the construction of a local plant and also planning to establish a new facility in Mexico. Despite Mexico not imposing tariffs on Chinese EVs, the US government is urging restrictions on dealings with Chinese automakers. The Biden administration has warned of further penalties if Chinese companies try to evade US tariffs by relocating production to Mexico. Meanwhile, concerns about a potential re-election of Donald Trump in November and the possibility of stricter sanctions are driving an increase in exports. This has led to a bidding war for cargo space on ships, raising shipping costs between China, Brazil, and Mexico. The Shanghai Containerised Freight Index shows a 55.8 per cent price increase on the China-South America route (including Mexico and Brazil) from late January to late April. In contrast, shipping costs to Europe have declined by 31 per cent, as the EU investigates alleged unfair subsidies for Chinese EVs.
