Unlike Mexico and Argentina, Brazil’s automakers held off imports – but EVs are changing that

Brazil and Mexico have been making cars for a century, but their auto sectors have diverged amid globalized supply chains and the rise of electric vehicles.

While the brands might be foreign-owned, almost 80% of the cars sold in Brazil are domestically made – a legacy of industrialization behind protective tariffs. The popularity of imports has waxed and waned, depending on the exchange rate; during the late 2000s commodity boom, a strong real hampered domestic vehicles’ competitiveness.

Meanwhile, Mexican production became oriented toward the US under NAFTA, while imports grew to two-thirds of the domestic market. Firms like Volkswagen, GM and Nissan use Mexico as a manufacturing base to send vehicles abroad.

During the 2020s, imports’ share has climbed in both countries; this is directly linked to the rise of EVs – usually Chinese-made. To keep policymakers onside, Chinese EV makers are opening local plants; BYD recently debuted its first Brazilian-made, plug-in hybrid – able to run on three fuels.