It’s the worst-kept secret in the automotive world, if you can even call it a secret anymore: leading Chinese plug-in hybrid and electric vehicle manufacturer BYD wants to build a factory in Mexico that would give it a theoretical base of entry into the United States market. BYD is already selling cars in Mexico; why not make them there too, right? And today, a top BYD executive revealed a few more details about this potential expansion plan. 

Zhou Zou, the country manager of BYD Mexico, told Nikkei Asia in Mexico City that BYD “is considering” setting up a plant in Mexico, explicitly as an export hub to the U.S. Granted, there have been rumblings about this move before, but this is one of the more direct times a BYD official has weighed in on the plan. 

Nikkei Asia reports that BYD has launched a “feasibility study” for a Mexican plant, a facility that would join its growing manufacturing presence in Brazil, Hungary and Thailand. After record sales of more than 3 million cars in 2023—including passing Tesla in all-electric vehicle sales for the first time ever—BYD is keen to expand into Latin America, Europe and other parts of Asia.  Zou told the Japanese newspaper that Nuevo Leon in northern Mexico and the Yucatan Peninsula are among the leading candidates for a factory location in that country.

Doing so would help strengthen BYD’s presence in Mexico and Latin America, where it is already starting to see strong sales. But a far greater victory for a Mexican plant would be its use as an entry point into the American market, where many automakers are either struggling with or dialing back their electric vehicle plans as demand proves more uncertain than expected. 

The biggest thing keeping BYD out of the U.S. for now is steep 27.5% tariffs on Chinese-made cars. But cars made in Mexico are not subject to those same tariffs even if they come from a Chinese-owned company. I wrote “in theory” up top because it’s certainly possible that U.S. lawmakers could find some way to impose more restrictions on even Mexican-built Chinese cars, but for now, that’s not the case.

To put it simply: BYD is a leader in global electric vehicle sales and technology whose car prices seriously undercut most rivals, and a Mexican factory would open the floodgates to those cars competing for buyers with Ford, General Motors, Toyota, Nissan and the rest. And the seriousness of that potential street fight is increasingly weighing on automotive executives in America, many of whom worry they aren’t prepared for such a battle. Even Tesla CEO Elon Musk recently expressed fears that Chinese automakers would “demolish” rivals without trade barriers in place. 

Granted, none of this is an official confirmation from BYD that a Mexican plant is coming; not yet, anyway. But it is further evidence that the plan seems quite likely, even in spite of high interest rates, an uncertain economy and questions over EV demand in the U.S. 

Moreover, as Nikkei Asia reports, it is more proof of how Mexico is quickly becoming a major EV manufacturing hub in the Western Hemisphere. Kia, BMW, Stellantis, General Motors and Ford are either building EVs there now or quickly ramping them up to take advantage of lower labor costs as all of them chase more affordable electric cars.

The question now is: will they be able to fend off BYD when, and likely not if, the company comes to the U.S.?