China's clean energy push could potentially drive Brazil's industrial renaissance.
In a significant move, Chinese automaker BYD has started producing Brazil's first domestically built battery-electric passenger car at a plant previously owned by Ford. This is part of a broader trend of Chinese investment in Brazil's manufacturing sector, with Great Wall Motors (GWM) set to begin production at a former Mercedes-Benz factory in Iracemápolis this month.
BYD, known for its electric-bus chassis and solar-panel modules, already operates two factories in Brazil. One in Campinas produces electric-bus chassis and solar-panel modules, while another in Manaus assembles lithium-iron-phosphate battery packs for BYD buses.
The expansion of Chinese companies in Brazil's clean energy and automotive sectors aligns with President Luiz Inácio Lula da Silva's "sustainable" reindustrialisation agenda. Chinese firms, including GWM, BYD, and Goldwind, have made commitments to invest in clean energy manufacturing in Brazil. Windey plans to build an assembly plant in Bahia, and Envision Energy will construct a sustainable aviation fuel complex.
The Brazilian government is encouraging this investment through various strategies. The Brazilian development bank (BNDES) has unlocked BRL 300 billion (USD 54 billion) in subsidized credit under the New Industry Brazil strategy. The auto-focused Mover program provides tax credits to firms that relocate production to Brazil and channel a share of their turnover into domestic research and development.
The government is also implementing tariffs to protect local industries. Tariffs on completed wind turbines have been increased from 11.2% to 25% by January 2026. Similarly, import duties on solar panels have been raised to 25% in November 2024, and electric vehicles now face a 35% duty by July 2026.
Both the GWM and BYD plants will initially assemble cars from kits imported from China, but the plan is to gradually increase the number of components manufactured in Brazil. GWM's Bastos mentioned that to export from Brazil, they must comply with a lot of local content rules.
Stellantis also plans to manufacture more components for car production at the Iracemápolis plant in Brazil. GAC is set to break ground on a new EV plant in Brazil by 2026.
Despite these investments, some are cautious about the government's success in capturing more of the cleantech value chain from China. Celio Hiratuka thinks that BYD is still testing the market and may not need to produce in Brazil immediately.
Elbia Gannoum, the CEO of the Brazilian Wind Energy Association, stated that between 60% and 80% of wind turbine components are already manufactured in Brazil. The new GWM factory will focus on producing hybrids, specifically the Haval H6.
Armando Castelar, coordinator of applied economics at the Brazilian Institute of Economics, stated that there is plenty of space for looking favorably at Chinese investment that goes into manufacturing in Brazil. Liu Hongzhong, who teaches economics at Xi'an Jiaotong University in Shaanxi, urges more balanced and sustainable economic and trade cooperation with countries in the Global South.
China's State Grid has played a central role in developing Brazil's electricity grid, building two lines that span the length of Brazil and constructing some of the country's most ambitious transmission projects. The government's efforts to attract Chinese investment and protect local industries are part of a broader strategy to modernise and green Brazil's economy.
