Chinese car giants rush into Brazil with dreams of dominating a continent

Time of India

21-07-2025

A two-hour drive beyond the traffic jams of São Paulo, past the vast valleys of sugar cane, one of the first Chinese battery-powered car factories in the Americas is getting ready to open.
Its goal is to reinvent the way Brazil drives, and ultimately, the rest of Latin America, much as Chinese automakers have already done across much of Asia and want to do in Europe.
Until recently, this factory was run by Mercedes-Benz, the German giant of 20th century automotive innovation that churned out cars powered by gasoline. Today, it's owned by Great Wall Motor, a company that is now one of China's leading exporters of stylish, affordable electric vehicles.
The change in hands reflects a profound disruption for one of the world's most vital industries. If American and European gas-guzzling cars once dominated global tastes and trends, that era appears to be fast turning to China's favor.
Today, not only does China make and export more cars of all types than any other country in the world, Chinese firms dominate the global manufacture of battery-powered vehicles of the future. They also control the supply chain for virtually everything that goes into those cars.
China's EV s are among the most advanced in the world. Some today go as far on a single charge as top-of-the-line Teslas, at lower prices. One Chinese carmaker, BYD, short for Build Your Dreams, has developed technology that can deliver a full charge in just five minutes.
Little wonder that Tesla sales in China are lagging, and that the United States, under both Presidents Joe Biden and
Donald Trump
, have essentially banned Chinese car imports.
For China, that leaves the rest of the world.
Its electric and hybrid manufacturers have set up, or are in the process of setting up, factories in Hungary, Indonesia, Russia, Thailand and Turkey. These efforts, including Great Wall's Brazilian factory, are part of a globe-spanning campaign by China to seize a major share of the world's auto industry, a powerful source of revenues, jobs and also national prestige.
Western auto giants are alarmed.
"We are in a global competition with China," Jim Farley, the CEO of
Ford
Motor Co., said at the Aspen Ideas conference in June. "It's not just EVs. And if we lose this, we do not have a future at Ford."
Great Wall Motor took over the Mercedes plant in the industrial town of Iracemápolis, near São Paulo, after the German carmaker closed shop in 2021, blaming a slump in luxury car sales. BYD took over a Ford factory after years of poor sales and steep losses forced the U.S. car giant to end its long history of manufacturing in Brazil.
Farley at the time called the closures "difficult but necessary actions." Ford had assembled cars in Brazil for a century, starting with the Model T.
"For the first time in decades, we're seeing a real challenge to the dominance of American and European brands, not just in terms of market share, but in shaping the future of mobility," said
Natalie Unterstell
, president of a climate research and advocacy organization called Talanoa Institute, based in Rio de Janeiro.
Brazil, the world's sixth largest car market, is trying to take advantage of it, instead of being steamrolled. It's prodding companies, no matter where they're from, to make cars on Brazilian soil, the less polluting the better, while also imposing steadily rising tariffs on imports.
It hasn't all been smooth sailing. There have been union clashes over Chinese labor practices. But the government's overall message: If you want access to our car buyers, then come and create factories and factory jobs here.
"We don't want to be an importer of technologies produced in other countries only," said
Rafael Dubeux
, special adviser to the Finance Ministry, in an interview in Brazil's capital, Brasília. "We also want to take advantage of this profound change in the world, in manufacturing facilities, so that Brazil also has a part in the value chains that we think are the ones that will prevail."
At least three Chinese firms are opening assembly plants in Brazil. In addition to Great Wall Motor and BYD, another Chinese automaker, Chery, has teamed up with a Brazilian company, Caoa, to produce cars in central Goias state.
Nevertheless, Marcio Lima Leite, head of the Brazil automaker association, remains worried. The new Chinese auto plants are mainly assembling cars with components imported from China, including the most valuable component, batteries. That, he said, will not advance the industry in Brazil.
"It's very important to have competitiveness in Brazil, to produce the new technology in Brazil," he said.
Chinese carmakers have had to bend to local needs in important ways. In Brazil, that means the needs of the powerful ethanol industry. Ethanol is produced from the country's huge sugar cane crop, and Brazilian law requires every liter of gasoline to be a little more than 25% ethanol.
So the auto companies aren't just making fully electric cars in Brazil. They are also having to make hybrids that run partly on the gas-ethanol blend and partly on batteries. "We need to produce what customers are looking for," said
Marcio Renato Alfonso
, a Brazilian who worked for an American carmaker for many years and is now Great Wall's director of research and development for Brazil. "High technology with an affordable price."
Along Henry Ford Avenue
in the industrial city of Camaçari, what was once a Ford factory is now becoming a BYD factory.
This had been Ford's newest plant. Every day, starting in 2001, it churned out hundreds of gas-powered cars. It employed some 5,000 workers. It also lost huge amounts of money.
In 2021, the Ford plant shut down.
"It was a shock," said Júlio Bonfim, who was president of the metal workers union at the factory. "I imagined my son would also work at the plant. It didn't happen."
The state government offered BYD a basket of incentives to take over the plant. But almost as soon as the Chinese company arrived, it got enmeshed in a labor scandal.
In December, Brazilian officials accused BYD's contractor, Jinjiang Construction Group, with keeping 163 Chinese workers in "conditions akin to slavery" and in violation of Brazilian labor laws. It embodied the reckoning that Chinese companies face as they seek to expand in Brazil, which has robust unions.
The workers were sent back home. Construction slowed down. Company officials said they expect to start production later this year. When it does, Bonfim's union insists that Brazilians must be hired to work the line. It has threatened to strike if Chinese workers are brought in.
BYD's top executive for Brazil,
Alexandre Baldy
, said the firm had taken steps to address the violations. In May the labor prosecutor's office filed charges against the carmaker and its contractors for human trafficking. The company said it plans to challenge the charges.
In the meantime, the Great Wall factory in Iracemápolis will almost assuredly already be fully operational. An opening ceremony is planned for August. Cars are due to roll off the factory floor soon after.
The factory first plans to produce one hybrid model and three plug-in hybrids.