Mexico is facing US pressure to stop giving incentives to Chinese EV manufacturers

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Mexico’s federal government, under pressure from the U.S., is keeping Chinese automakers at arm’s length by refusing to offer such incentives as low-cost public land or tax cuts for investment in EV production, three Mexican officials familiar with the matter said.

The last meeting between top Mexican officials and a Chinese automaker was in January, the sources said, with executives of BYD Co (002594.SZ), opening a new tab – one of the world’s largest electric vehicle makers by sales.

At the meeting, Mexican officials made clear they would not give incentives like those awarded to automakers in the past and that officials would be putting on pause any future meetings with Chinese automakers, said the sources, who asked not to be identified.

The office of Mexican President Andres Manuel Lopez Obrador did not immediately respond to a request for comment. The Mexican Economy Ministry declined to comment.

BYD officials and the Chinese embassy in the Latin American country did not immediately respond to a request for comment. A White House spokesperson said U.S. President Joe Biden will not let Chinese automakers flood the market with vehicles that pose a threat to national security.

Reuters was not able to ascertain which Chinese automakers have requested meetings since. Mexican government officials typically do not disclose subsidies given to the companies for plants.

About 20 Chinese automakers now sell cars in Mexico but none yet have a plant in the country. Chinese vehicles constitute about a third of the total brand offerings in Mexico.

The sources attributed the move to U.S. government pressure, specifically from the Office of the United States Trade Representative (USTR), to keep Chinese automakers out of the free trade zone established under the North American Free Trade Agreement.

Source: El Financiero

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