In This Article:
China is delaying regulatory approvals for Geely (GELYF, Financials) and BYD (BYDDF, Financials) to pursue automotive production plans in Latin America due to concerns over technology transfer risks and uncertainty tied to U.S. tariffs, Reuters reported Friday, citing people familiar with the matter.
Geely, whose founder also owns the Volvo and Polestar brands, disclosed in February that it would take a minority stake in Renault's (RNLSY, Financials) Brazil operations and use the French automaker's local production facilities. Geely told Reuters the partnership remains on schedule and said its EX5 electric vehicle launched this week in Brazil, with sales set to begin in July across 18 cities.
BYD, which still generates more than 90% of its sales in China, announced plans in 2023 to build a plant in Mexico. Reuters said the company had expected to announce the plant's location by the end of 2024. However, approvals from Beijing have taken longer than anticipated. According to Reuters, China's state planner raised concerns about technology leaks to the United States, though it did not elaborate.
Officials at China's auto industry associations separately told the companies that U.S. President Donald Trump's tariffs have introduced broader uncertainty into global trade and investment strategies, complicating the risk-reward calculus for outbound ventures, Reuters said.
Although Beijing has not halted approvals altogether, Reuters cited a third source saying the review process has become more stringent. Regulators are now requesting more extensive documentation and have extended evaluation timelines for overseas investments.
Reuters previously reported in March that Chinese authorities were also delaying approval for BYD's Mexican plant over concerns that its proprietary electric vehicle technology could be accessed by the United States.
Reuters said requests for comment from BYD, Renault, and the National Development and Reform Commission were not immediately returned.
This article first appeared on GuruFocus.