Chinese Automakers Accelerate South American EV Dominance Amid European Trade Stagnation

Latin America - Ekhbary News Agency

Chinese Automakers Accelerate South American EV Dominance Amid European Trade Stagnation

As China's electric vehicle manufacturers rapidly expand across South America, European rivals find themselves at a disadvantage due to stalled trade agreements and cautious market strategies. This dynamic is reshaping the regional automotive landscape, creating a high-stakes battle for the continent's future auto market. Beijing-backed enterprises are swiftly filling a vacuum created by Europe's hesitation with crucial trade liberalization efforts, challenging established players and highlighting a divergence in global trade approaches.

The strategic shift is particularly evident in Brazil, South America's largest economy. Here, a new generation of automotive leadership is actively embracing partnerships with Chinese industry. Philipe Andrade, 23, and Carlos Alberto Andrade, 26, heirs to the prominent Brazilian auto group CAOA, exemplify this forward-looking vision. CAOA, founded in 1979, has a rich history in vehicle manufacturing, import, and sales. Its Anapolis assembly plant produces Hyundai and Chery models, complementing an extensive dealership network for Asian brands. Signaling deeper integration with Chinese powerhouses, the Andrade brothers recently announced plans to begin producing vehicles for another major Chinese brand, Changan, later this year.

CAOA's Anapolis facility has already demonstrated significant growth, doubling its output from 30,000 vehicles in 2023 to approximately 60,000 the following year, with projections for a further increase to 70,000 units. While not yet a market heavyweight, its round-the-clock operations underscore the intense market competition. This localized production strategy is a key differentiator for Chinese firms, which are not merely exporting cars but investing in regional manufacturing capabilities. Analysts from Bright Consulting, a Brazilian car market firm, predict that by 2030, a substantial one-fifth of all new cars sold in Brazil will originate from China, indicating a profound market transformation.

This trend extends to Argentina, where a similar influx of Chinese vehicles is underway. On January 20, the Chinese car carrier BYD Changzhou made its inaugural docking, unloading 5,841 vehicles at the strategically vital Port of Zarate in Buenos Aires province. The shipment included both fully electric and hybrid SUV models, marking a bold statement from BYD, the world's largest electric vehicle manufacturer by sales volume. BYD launched its marketing efforts in Argentina last year through a wholly-owned subsidiary, opting to maintain nearly complete control over its value chain rather than forming local partnerships, thereby deepening Chinese influence.

BYD's ambitious medium-term goal is to export 50,000 vehicles annually to Argentina. This target is closely tied to the recent market liberalization policies championed by Argentina's libertarian President Javier Milei. President Milei has progressively eased restrictions on hybrid and electric vehicle imports, introducing an annual quota of 50,000 vehicles that can enter the country without incurring the standard 35% import tariff. This pivotal quota is slated to remain in effect through 2029, potentially allowing up to a quarter-million vehicles to be imported duty-free, providing a significant competitive advantage to new market entrants, particularly Chinese brands.

Further illustrating the regional pivot, Uruguay, a member of the Mercosur trade bloc, has also witnessed a dramatic surge in EV sales. The Uruguayan Automobile Association (ACAU), representing 26 major automotive companies, reported an astounding 147% jump in EV sales in 2025 in its annual review, signaling widespread adoption across the continent.

The aggressive entry of Chinese electric vehicles has intensified competition across Latin American car markets, catching many traditional players off guard. European automakers, in particular, had hoped a long-awaited free trade agreement between Mercosur and the European Union would solidify their competitive standing in key markets like Argentina, Brazil, Paraguay, and Uruguay. However, these aspirations suffered a significant blow when the European Parliament, on January 21, referred the agreement to the European Court of Justice (ECJ) for legal review. While the deal is provisionally expected to apply, this referral introduces considerable legal uncertainty and signals potential unreliability from Europe regarding negotiated trade pacts.

The German automotive industry, a key European stakeholder, has voiced profound concerns. A spokesperson for Germany's auto industry association, VDA, emphasized to DW that an EU-Mercosur agreement would unlock "significant opportunities" by substantially reducing Mercosur's high tariffs, which range from 14% to 18% on vehicle parts and soar to 35% on new cars. Reciprocal EU tariff cuts would also "create new export opportunities for Mercosur countries and strengthen their economic development," the spokesperson added. VDA President Hildegard Müller characterized the European Parliament's decision as a "disastrous signal," warning it could delay the agreement's entry into force "significantly, possibly even by years," and urged for immediate clarity on its provisional application.

German automotive companies maintain a substantial footprint in Mercosur, operating 310 sites, predominantly supplier facilities crucial for local employment. In the first half of 2025, German manufacturers produced 289,200 passenger cars within Mercosur, primarily in Brazil and Argentina, demonstrating their existing commitment to local production. In stark contrast, only 18,400 vehicles were exported from Europe to the region during the same period, underscoring the disparity in market engagement strategies. As global automotive competition intensifies and geopolitical dynamics shift, the battle for South America's two largest car markets—and the broader region—has unequivocally begun, with China emerging as a formidable and rapidly advancing force.

Ekhbary News Agency