BYD and Geely vie for Nissan-Mercedes Mexico plant

A 12 February Reuters claims that BYD and Geely are among the finalists vying to purchase a Nissan-Mercedes-Benz plant in Aguascalientes, Mexico, as Chinese automakers seek to gain a manufacturing foothold in a country where US tariffs are fuelling factory closures and layoffs. Vietnamese electric vehicle maker VinFast rounds out the top three in a total of nine companies, with other interested parties reportedly including Chery and Great Wall Motor.

The Aguascalientes plant, which opened in 2017 with an annual capacity of up to 230,000 vehicles, is shuttering after Mercedes moved production of the GLB to Hungary where it can export to the US at lower tariff rates than it can from neighbouring Mexico. Meanwhile, Nissan is cancelling the slow-selling Infiniti QX50 and QX55 models it produced at the facility as part of a dramatic global restructuring that will also see it shutter a second local factory outside Mexico City. 

Mexican economy ministry officials have quietly urged state authorities to stall Chinese automakers’ investments until the country completes US trade talks, two government sources told Reuters. Mexico imposed 50% tariffs on Chinese cars and other goods last year in an apparent effort to appease the Trump administration, but the import taxes have the secondary effect of incentivising Chinese automakers to manufacture locally instead. 

A White House spokesperson said US trade barriers are rooted in national and economic security concerns, citing “subsidized Chinese overcapacity pushing Chinese firms to dump excess production into other markets”. The US continues to impose duties of 100% on Chinese-made EVs and other components, while Canada—the only other country to keep such a high rate—recently made an allowance to allow up to 49,000 Chinese EVs into the country annually at a reduced 6.1% rate.

The nine automakers expressing interest in the plant skewed toward hybrid and EV production focused on supplying to Latin America, the Aguascalientes state government said without specifying company names or origins. Chinese automakers are required to win Beijing’s approval for overseas factory investments, with one source saying China’s commerce ministry is aware of the interest and has not raised objections thus far. 

It should be of little surprise that Mexico is increasingly amenable to Chinese automakers, even at the risk of incensing its northern neighbour. The country’s automotive industry lost approximately 60,000 jobs last year amid tariffs and automaker strategy shifts, with vehicle exports to the US falling nearly 3% in 2025 after three decades of consistent growth.

BYD had previously planned to build a new factory in Mexico producing around 150,000 vehicles annually, but the company grew weary of the red tape required for approval according to a government official familiar with the matter. China’s Commerce Ministry delayed approval for the expansion in March 2025 over concerns that Mexico’s proximity to the US could allow BYD’s advanced smart car and electrification technologies to leak across the border. 

The automaker eventually abandoned the project in July 2025, citing geopolitical volatility and trade tensions. Its Latin America strategy currently hinges on Brazil, where it opened its first plant—not without controversy—in July 2025. Vertical integration is also a key part of this strategy, and the automaker is targeting 50% of parts used at the Bahia state plant to be sourced locally by the end of 2026. 

Geely announced in June 2025 it would halt construction of new manufacturing plants globally citing “severe overcapacity” in the automotive industry. At the time, Goldman Sachs estimated that only half of China’s 20-million-unit global EV production capacity was actually being utilised. The automaker instead pursued manufacturing partnerships, including a 26.4% stake in Renault do Brasil to produce vehicles at the Ayrton Senna factory in Curitiba. That deal followed Geely taking a 34% stake in Renault’s Korean factory and creating a 50:50 joint venture for internal combustion engine and hybrid powertrains under the Horse brand.

Buying the Aguascalientes factory would not require Mexican government approval, and comes with the advantage of a skilled workforce ready to go on day one. Transportation infrastructure and approval processes for new construction would also be non-issues. BYD and other Chinese automakers collectively boosted their Mexican market share from zero in 2020 to approximately 10% in 2025, according to AutoForecast Solutions.