Great Wall Motor will invest $ 1.9 billion in Brazil over the next decade to produce electric and hybrid cars, the latest example of China’s auto industry expanding abroad.
The Baoding-based group said it would open its largest business outside China at a former Mercedes-Benz factory in the interior of the state of Sao Paulo, serving as an export hub in Latin America.
The Brazilian venture of one of China’s largest carmakers follows a series of Chinese deals in Latin America focused on mining, materials processing and manufacturing assets in the electric vehicle supply chain, an industry priority of Beijing. Parts of the region are rich in lithium and copper, metals that are crucial to the production of electric vehicles.
Great Wall’s investment is expected to boost the Brazilian automotive sector, which has suffered job closures and job losses as the economy slows. Ford left Brazil last year after decades of production in the country.
Great Wall has promised to create 2,000 jobs and capacity to produce 100,000 vehicles a year.
The first investment phase of about R $ 4 billion ($ 740 million), which will last until 2025, will focus on adapting and modernizing the production line at the Irasemapolis facility, 140 km from the state capital. The second phase will include R $ 6 billion ($ 1.11 billion) by 2032.
Great Wall said it will also launch a product line in Brazil that includes only hybrid and electric SUVs and pickups, which will be imported before the first cars leave the factory lines in the South American plant next year. The company said it expects to generate an annual turnover of R $ 30 billion in 2025.
“This is the first factory dedicated to hybrid and electric cars in Latin America alone,” said Pedro Bentancourt, director of government relations for Great Wall in Brazil.
Tu Le, managing director of Sino Auto Insights, said international expansion has become a priority for Chinese automotive groups, including BYD and Geely in addition to the Great Wall.
Geely, another major Chinese carmaker, also plans to enter the Brazilian market this year, a spokesman told the Financial Times.
Companies are looking for markets as growth in China, the world’s largest car market, slows. They are also working to strengthen the resilience of the supply chain after the turmoil caused by the trade war with the United States and the coronavirus pandemic.
“Affordable [electric vehicles] in Latin America, it looks like a formula for success if local authorities can be encouraged to invest in infrastructure, ”Tu said.
The offshore movement of Chinese electric vehicle manufacturers reflects “collective trust. . . that they can finally compete on an equal footing with all foreign carmakers, “he added.
There is currently a relatively limited market for electric vehicles in Brazil. Most cars sold in the country have “flexible” engines that can absorb both gasoline and ethanol, which is produced in the country from sugar cane.
All Great Wall offerings in Brazil will be flexible, Bentancourt said, adding that the company intends to have 60% of its automotive content from local suppliers by 2025.
Milad Calume Neto, Director of Business Development at JATO Dynamics, noted that Great Wall does not expect mass adoption.
“They will be niche vehicles. They don’t think about volume, “he said. As Brazil’s electricity market grew, “it is less than 1% of the fleet.”
Additional reports by Carolina Ingitsa and Nian Liu