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Time of India
12 hours ago
- Automotive
- Time of India
China floods Brazil with cheap EVs triggering backlash
The world's largest car-carrying ship, with the equivalent of 20 football fields of vehicles - completed its maiden journey late last month to dock in Brazil 's Itajai port. But not everyone is cheering its arrival. BYD , China 's top producer of electric and plug-in hybrid vehicles, is offering Brazilian car shoppers relatively low-priced options in a market where the green-car movement is still in its infancy. Brazilian auto-industry officials and labor leaders worry that the vast influx of cars from BYD and other Chinese automakers will set back domestic auto production and hurt jobs. BYD has deployed a growing fleet of cargo ships to accelerate its expansion overseas, with Brazil becoming its top target, according to Reuters analysis of shipping data and company statements. The late-May shipment was the fourth of the Chinese carmaker's ships to dock in Brazil this year, totaling around 22,000 vehicles, according to Reuters calculations. BYD, the world's top producer of electric and plug-in hybrid cars, is the largest among several Chinese brands targeting Brazil for growth. China-built vehicle imports are expected to grow nearly 40 per cent this year, to about 200,000, according to Brazil's main auto association. That would account for roughly 8 per cent of total light-vehicle registrations. Industry and labor groups say China is taking advantage of Brazil's temporarily low tariff barriers to ramp up its exports rather than investing to build Brazilian factories and create jobs. They are lobbying Brazil's government to accelerate by a year a plan to increase Brazil's tariff on all EV imports to 35 per cent from 10 per cent, rather than gradually phasing in higher levies. "Countries around the world started closing their doors to the Chinese, but Brazil didn't," said Aroaldo da Silva, a Mercedes-Benz production worker and president of IndustriALL Brasil, a confederation of unions across six industrial sectors. "China made use of that." BYD did not respond to a request for comment on the industry's concerns. SURPLUS CARS Brazil has emerged as a flashpoint in the China auto industry's torrid global expansion. A growing surplus of new cars being pumped out of Chinese factories has led to an export boom over the past five years, helping China pass Japan in 2023 to become the world's top vehicle exporter. Much of this excess is being shipped overseas, to markets like Europe, Southeast Asia and Latin America. Brazil offers an enticing destination due to its large market - it is the sixth-largest car market by volume - where established players including Volkswagen , General Motors and Jeep-maker Stellantis have been building cars domestically for decades. The Brazilian government has set policies aimed at growing sales of electric and plug-in hybrid cars, BYD's specialty. Meanwhile, BYD's path for growth elsewhere has narrowed, both domestically and overseas. At home, the company is mired in a bruising price war that has seen it slash the price of its entry-level Seagull to below $10,000, squeezing profit margins. Abroad, governments have erected stiff trade barriers for Chinese cars, including a 45.3 per cent duty in Europe and a tariff of more than 100 per cent in the United States, along with a ban on Chinese software in cars. For years, Brazilian officials have taken steps to protect the market from unfettered access by Chinese car companies. But it has been slower to react and less aggressive than other nations. In 2015, Brazil eliminated tariffs on manufacturers like BYD to spur electric vehicle adoption, but last year it reintroduced a 10 per cent tariff on electric cars to encourage investment in the domestic auto industry. The tariff is scheduled to increase every six months before hitting 35 per cent in 2026. Brazil's Ministry of Development, Industry & Foreign Trade told Reuters that a request by Brazil's auto association, ANFAVEA, and others to pull forward the higher tariff was under review. "The schedule for the gradual resumption of tariffs, with decreasing quotas, was established to allow companies to continue with their development plans and respect the maturity of manufacturing in the country," a ministry spokesperson added. BYD and other Chinese companies also are taking advantage of a policy in Brazil that allows them to import toll-free up to $169 million for plug-in hybrids imported by July 2025 and $226 million for battery-electric cars. That incentivizes front loading of vehicle shipments to fully benefit from the toll-free quotas before they expire, analysts said. 'EXCESS OF IMPORTS' BYD's export strategy hinges on the carmaker being able to continue growing shipments without triggering resistance from local authorities. But industry representatives in Brazil have grown increasingly worried that BYD's plans to begin domestic vehicle production are being pushed off. In 2023, government officials cheered BYD's plan to purchase a former Ford plant in the state of Bahia, viewing it as a way to create manufacturing jobs and spur the country's green transition. But an investigation into labor abuses on the construction site pushed back its timeline for "fully functional" production to December 2026, local officials said in May. Another Chinese automaker, GWM, also delayed by more than a year its plan to start making cars at a former Mercedes-Benz plant. The Brazilian government expects the plant to begin operating this year. "We support the arrival of new brands in Brazil to produce, promote the components sector, create jobs and bring new technologies," Igor Calvet , president of ANFAVEA, told Reuters. "But from the moment that an excess of imports causes lower investment in production in Brazil, that worries us." Da Silva of IndustriALL said his confederation of unions had not heard of any local supplier relationships being developed or contracts being signed for the BYD plant, as would normally be expected 18 months from the start of production. "Even if the factory is here - what value is it really adding if the components, development, and technology is all from abroad?" da Silva said. BYD did not respond to a request for comment on its supplier network. President Lula da Silva 's left-wing Workers Party government is scrambling to protect jobs and the environment as it aims to both revive Brazil's industrial economy and restore its green credentials ahead of hosting the COP30 global climate summit this November. Still, the country's nascent green-car movement leans on Chinese imports, which account for more than 80 per cent of Brazil's electric-car sales, according to Brazil's EV association, ABVE. The country has abundant mineral resources including lithium and other key ingredients to make EV batteries. But the infrastructure to produce all the necessary components for electric cars does not exist yet, said Ricardo Bastos , director of government relations at GWM Brazil and president of ABVE. GWM, which bought a factory in Brazil in 2021 with capacity for 50,000 cars a year and is due to start producing its Haval H6 SUV there this July, is in talks with around 100 Brazil-based suppliers on setting up contracts, Bastos told Reuters. "This year, imported cars will coexist alongside cars produced in Brazil," Bastos said.
CNBC
09-06-2025
- Automotive
- CNBC
China extends an olive branch to Western auto giants over rare earth shortage
China appears to have offered U.S. and European auto giants something of a reprieve after industry groups warned of increasing production threats over a rare earth shortage. China's Ministry of Commerce on Saturday said it was willing to establish a so-called "green channel" for eligible export license applications to expedite the approval process to European Union firms. A Ministry of Commerce spokesperson said Wang expressed hope that the EU would take "reciprocal steps" and adopt measures to promote compliant trade of high-tech products with China. The breakthrough comes after trade talks between Chinese Commerce Minister Wang Wentao and EU Trade Commissioner Maros Sefcovic met in Paris, France last week. Beijing also granted rare earth licenses to suppliers of U.S. auto giants General Motors, Ford and Jeep-maker Stellantis, Reuters reported on Friday, citing unnamed sources. The report said China's Ministry of Commerce did not respond to a faxed request for comment. CNBC has contacted GM, Ford and Stellantis. China's Ministry of Commerce in early April imposed export restrictions on several rare earth elements and magnets widely used in the automotive, defense and energy sectors. The curbs were part of a response to U.S. President Donald Trump's tariff increase on Beijing's products. Some of the affected rare earth elements were critical components to the production of both combustion engines and electric vehicles. Maximilian Butek, an executive director and board member of the German Chamber of Commerce in China, said the weekend announcement was certainly good news for European businesses, but noted that it remains unclear whether the fast-track channel applies to large-scale firms or to sectors more broadly. "It is a huge bureaucratic monster that they've created and I'm not sure if they really can now speed up the process and give the licenses to those who need them," Butek told CNBC's "Europe Early Edition" on Monday. Europe's top automakers will welcome the diplomatic breakthrough, Butek said, while stressing the European bloc's need to improve supply chain diversification. "It all hit us quite by surprise that China is even willing to draw this card because this is a retaliation measurement towards the tariffs the U.S. implemented, right? And we, as European companies, we are now in the crossfire of this trade escalation, and this is really not where we want to be," Butek said. "It is not enough just to announce it but they have to show it," he added. China is the undisputed leader of the critical minerals supply chain, accounting for roughly 60% of the world's production of rare earth minerals and materials. U.S. officials have previously warned that this dominance poses a strategic challenge amid the pivot to more sustainable energy sources. Some analysts have compared the industry-wide squeeze on supplies of rare earth magnets to the global semiconductor crisis that disrupted automotive production during the coronavirus pandemic. Speaking to CNBC before China announced plans to expedite the approval process of rare earth exports to the EU, the European Automobile Manufacturers' Association (ACEA) said some of its members were at risk of production outages starting as soon as next month. The car lobby group, which represents the likes of Stellantis, Renault, Ferrari, Volkswagen and Volvo, said rare earth export licenses by China's Ministry of Commerce had been taking a "significant" amount of time to process since the April restrictions came into force. "Generally, global stocks of these magnets are quite low. And, given that China is the bulk global supplier, it has meant that, in the absence of these export licenses, those stocks have been depleting progressively since the start of April," Jonathan O'Riordan, international trade director at ACEA, told CNBC by phone. "We're gradually coming into a very, very critical moment whereby those stocks are now being exhausted, and we are potentially going to see production stoppages," he added. ACEA's warning followed a separate ominous update from the European Association of Automotive Suppliers. Last week, the group said that several auto supplier plants and production lines had already been shut down due to Beijing's recent export restrictions, with further outages expected as rare earth inventories deplete over the coming weeks. Japanese automaker Suzuki Motor, however, suspended production of its Swift car due to China's rare earth curbs, Reuters reported Thursday, citing two unnamed sources. A Suzuki Motor spokesperson did not respond to a request for comment when contacted by CNBC. Demand for rare earths and critical minerals is expected to grow exponentially in the coming years as the clean energy transition picks up pace.
Yomiuri Shimbun
07-06-2025
- Automotive
- Yomiuri Shimbun
China issues rare earth licenses to suppliers of top 3 US automakers, sources say
Reuters file photo Workers transport soil containing rare earth elements for export at a port in Lianyungang, Jiangsu province, China October 31, 2010. BEIJING/WASHINGTON, June 6 (Reuters) – China has granted temporary export licenses to rare-earth suppliers of the top three U.S. automakers, two sources familiar with the matter said, as supply chain disruptions begin to surface from Beijing's export curbs on those materials. At least some of the licenses are valid for six months, the two sources said, declining to be named because the information is not public. It was not immediately clear what quantity or items are covered by the approval or whether the move signals China is preparing to ease the rare-earths licensing process, which industry groups say is cumbersome and has created a supply bottleneck. China's decision in April to restrict exports of a wide range of rare earths and related magnets has tripped up the supply chains central to automakers, aerospace manufacturers, semiconductor companies and military contractors around the world. China's dominance of the critical mineral industry, key to the green energy transition, is increasingly viewed as a key point of leverage for Beijing in its trade war with U.S. President Donald Trump. China produces around 90% of the world's rare earths, and auto industry representatives have warned of increasing threats to production due to their dependency on it for those parts. Suppliers of three big U.S. automakers, General Motors, GM.N, Ford F.N and Jeep-maker Stellantis got clearance for some rare earth export licenses on Monday, one of the two sources said. GM and Ford each declined to comment. Stellantis said it is working with suppliers 'to ensure an efficient licensing process' and that so far the company has been able to 'address immediate production concerns without major disruptions.' China's Ministry of Commerce did not immediately respond to a faxed request for comment. China's critical-mineral export controls have become a focus on Trump's criticism of Beijing, which he says has violated the truce reached last month to roll back tariffs and trade restrictions. On Thursday, Trump and Chinese President Xi Jinping had a lengthy phone call to iron out trade differences. Trump said in social-media post that 'there should no longer be any questions respecting the complexity of Rare Earth products.' Both sides said teams will meet again soon. U.S. auto companies are already feeling the impact of the restrictions. Ford F.N shut down production of its Explorer SUV at its Chicago plant for a week in May because of a rare-earth shortage, the company said. The approval for the auto suppliers follows a green light granted to a U.S. electronics firm's suppliers last week and another one issued earlier this week to suppliers of a U.S. non-auto company, the first person said, declining to name the companies. 'We have to give the Chinese the benefit of the doubt that they're working through this. It's up to them to show that they are not weaponizing it,' said the person. Reuters reported on Wednesday that China has introduced a tracking system for its rare earth magnet sector in a move to improve its control over the sector and crackdown on smuggling.
Time of India
07-06-2025
- Automotive
- Time of India
China okays rare earth licences to suppliers of top three US auto companies
China has granted temporary export licenses to rare-earth suppliers of the top three US automakers, two sources familiar with the matter said, as supply chain disruptions begin to surface from Beijing's export curbs on those materials. At least some of the licenses are valid for six months, the two sources said, declining to be named because the information is not public. It was not immediately clear what quantity or items are covered by the approval or whether the move signals China is preparing to ease the rare-earths licensing process, which industry groups say is cumbersome and has created a supply bottleneck. China's decision in April to restrict exports of a wide range of rare earths and related magnets has tripped up the supply chains central to automakers, aerospace manufacturers, semiconductor companies and military contractors around the world. China's dominance of the critical mineral industry, key to the green energy transition, is increasingly viewed as a key point of leverage for Beijing in its trade war with US President Donald Trump . China produces around 90% of the world's rare earths, and auto industry representatives have warned of increasing threats to production due to their dependency on it for those parts. Suppliers of three big US automakers, General Motors , Ford and Jeep-maker Stellantis got clearance for some rare earth export licenses on Monday, one of the two sources said. GM and Ford each declined to comment. Stellantis said it is working with suppliers "to ensure an efficient licensing process" and that so far the company has been able to "address immediate production concerns without major disruptions." China's Ministry of Commerce did not immediately respond to a faxed request for comment. China's critical-mineral export controls have become a focus on Trump's criticism of Beijing, which he says has violated the truce reached last month to roll back tariffs and trade restrictions. On Thursday, Trump and Chinese President Xi Jinping had a lengthy phone call to iron out trade differences. Trump said in social-media post that "there should no longer be any questions respecting the complexity of Rare Earth products." Both sides said teams will meet again soon. US auto companies are already feeling the impact of the restrictions. Ford shut down production of its Explorer SUV at its Chicago plant for a week in May because of a rare-earth shortage, the company said.
Time of India
06-06-2025
- Automotive
- Time of India
China okays rare earth licences to suppliers of top three US auto companies
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel BEIJING/WASHINGTON: China has granted temporary export licenses to rare-earth suppliers of the top three US automakers, two sources familiar with the matter said, as supply chain disruptions begin to surface from Beijing's export curbs on those least some of the licenses are valid for six months, the two sources said, declining to be named because the information is not public. It was not immediately clear what quantity or items are covered by the approval or whether the move signals China is preparing to ease the rare-earths licensing process, which industry groups say is cumbersome and has created a supply bottleneck. China's decision in April to restrict exports of a wide range of rare earths and related magnets has tripped up the supply chains central to automakers, aerospace manufacturers, semiconductor companies and military contractors around the dominance of the critical mineral industry, key to the green energy transition, is increasingly viewed as a key point of leverage for Beijing in its trade war with US President Donald Trump . China produces around 90% of the world's rare earths, and auto industry representatives have warned of increasing threats to production due to their dependency on it for those of three big US automakers, General Motors Ford and Jeep-maker Stellantis got clearance for some rare earth export licenses on Monday, one of the two sources and Ford each declined to comment. Stellantis said it is working with suppliers "to ensure an efficient licensing process" and that so far the company has been able to "address immediate production concerns without major disruptions."China's Ministry of Commerce did not immediately respond to a faxed request for comment. China's critical-mineral export controls have become a focus on Trump's criticism of Beijing, which he says has violated the truce reached last month to roll back tariffs and trade restrictions. On Thursday, Trump and Chinese President Xi Jinping had a lengthy phone call to iron out trade differences. Trump said in social-media post that "there should no longer be any questions respecting the complexity of Rare Earth products." Both sides said teams will meet again auto companies are already feeling the impact of the restrictions. Ford shut down production of its Explorer SUV at its Chicago plant for a week in May because of a rare-earth shortage, the company said.
