BYD moves to shield itself from looming US tariffs as President-Elect Trump threatens new import taxes on Chinese, Canadian, and Mexican goods. The China-based EV giant has reportedly ordered suppliers to slash costs by 10% starting in 2025.
This was in response to the upcoming Trump administration's proposed 10% import tariff on Chinese goods and a 25% tariff on imports from Canada and Mexico. A move that has created uncertainty for BYD's plans to establish a manufacturing facility in Mexico. In response, the company has implemented a strategic cost-cutting initiative, asking suppliers to reduce their prices by 10% beginning January 1, 2025.
According to a report from Sina News, a notice detailing BYD's cost reduction requirements for its passenger vehicles in 2025 has been circulating within China's EV supply chain. The document reveals BYD's request for a 10% price reduction from relevant suppliers starting January 1, 2025.
The notice emphasized BYD's position as the world's first automaker to achieve production of over 10 million new energy vehicles (NEVs). The company's cumulative sales exceeded 3.25 million units in the first ten months of 2024, with projections indicating sales will surpass 4.2 million units by year-end.
Responding to questions about the notice's authenticity, Yunfei Li, general manager of BYD's Brand and Public Relations Department, explained that annual supplier negotiations are standard industry practice. He emphasized that while price reduction targets are proposed based on large-scale procurement, these targets remain negotiable rather than mandatory.
Industry analysts note that BYD's request for a 10% supplier price reduction aligns with the proposed 10% tariff on Chinese imports, suggesting the company is proactively addressing potential tariff impacts through its supply chain strategy.
The leaked notification indicates BYD's assessment that while 2025 will present significant opportunities for NEVs, market competition will intensify. To maintain competitiveness, the company has asked suppliers to explore cost-reduction possibilities and achieve the set goals, with adjusted price reports due by December 15.
Initially planning to avoid direct US tariffs through a Mexican manufacturing facility, BYD now faces additional challenges with Trump's proposed 25% tariff on goods from Canada and Mexico, potentially affecting their manufacturing strategy in the region.
In recent developments, Jorge Vallejo, head of BYD Mexico, announced that the company has shortlisted three locations from 20 competing states for its first Mexican factory. According to Vallejo, the final selection process is nearing completion.
The company will evaluate factors including geographical location, infrastructure, supply chain support, and labor resources across the shortlisted Mexican states to determine the optimal site for its manufacturing facility.
