Two hours by car in addition to the traffic jams of São Paulo, going through the vast sugarcane valleys, one of the first factories of drum-powered electric cars in the Americas is about to be inaugurated.
The goal is to reinvent the way Brazil runs and, ultimately, the rest of Latin America, just as the Chinese automakers have done much of Asia and want to do in Europe.
Until recently, this factory was operated by Mercedes-Benz, the German giant of 20th century automotive innovation, which produced gasoline-powered cars. Today it belongs to Great Wall Motor, one of the main Chinese exporters of stylish and accessible electric vehicles.
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The change of hands reflects a profound transformation in one of the most vital industries in the world. If US and European cars, moved to fossil fuels, dominated taste and global trends, this was quickly seeming to turn in favor of China.
Today, China not only manufactures and exports more cars of all kinds than any other country, such as its companies dominate the global manufacture of future electric vehicles. They also control the supply chain of just about everything that makes up these cars.
Chinese electric vehicles are among the most advanced in the world. Some travel, with a single load, distances equivalent to Tesla’s top line models, but at lower prices. A Chinese automaker, BYD (Build Your Dreams), has developed technology capable of fully charging the battery in just five minutes.
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No wonder Tesla sales in China are falling, and that the United States, under the administrations of Joe Biden and Donald Trump, have practically prohibited the importation of Chinese cars.
For China, the rest of the world is left.
Its electric and hybrid vehicle manufacturers have already installed or are installing factories in Hungary, Indonesia, Russia, Thailand and Türkiye. These efforts, including the Great Wall factory in Brazil, are part of a global China campaign to gain a significant slice of the world automotive industry, a powerful source of revenue, jobs and national prestige.
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Western giants in the automotive industry are concerned.
“We are in a global competition with China,” said Jim Farley, CEO of Ford Motor, at the Aspen Ideas conference in June. “It’s not just about electric vehicles. And if we lose this dispute, we won’t have a future at Ford.”
Great Wall Motor took over the Mercedes factory in the industrial city of Iracemápolis, near Sao Paulo, after the German automaker closes its doors in 2021, blaming the drop in luxury car sales. They forced the American giant to end its long production history in Brazil.
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At the time, Farley called the closures “difficult but necessary actions.” Ford rode cars in Brazil a century ago, starting with the T model.
“For the first time in decades, we see a real challenge to the dominance of US and European brands, not only in market share, but in defining the future of mobility,” said Natalie Unstestell, president of the Talanoa Institute, research and climate defense organization in Rio de Janeiro.
Brazil, the sixth largest automotive market in the world, tries to take this opportunity instead of being run over. The country encourages companies, regardless of origin, to produce cars on Brazilian soil, preferably less polluting, while imposing growing tariffs on imports.
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Not everything has been easy. There were union conflicts related to Chinese labor practices. But the government’s general message is clear: if they want access to Brazilian consumers, come create factories and jobs here.
“We don’t just want to be importers of technologies produced in other countries,” said Rafael Dubeux, special advisor to the Ministry of Finance, in an interview in Brasilia. “We also want to take advantage of this profound change in the world, in industrial facilities, so that Brazil has participation in the value chains that we believe will prevail.”
At least three Chinese companies are opening assembly factories in Brazil. In addition to Great Wall Motor and Byd, another Chinese automaker, Chery, has partnered with Brazilian Caoa to produce cars in the center of Goiás State.
Still, Márcio Lima Leite, president of the Brazilian Association of automakers, remains concerned. The new Chinese factories in Brazil mainly ride cars with imported components from China, including the most valuable component, the batteries. According to him, this will not boost the national industry.
“It is very important to have competitiveness in Brazil, producing the new technology here,” he said.
Chinese automakers had to adapt to important local needs. In Brazil, this means meeting the powerful ethanol industry. Ethanol is produced from the huge sugarcane crop of the country, and Brazilian law requires each liter of gasoline contain just over 25% ethanol.
Thus, automakers do not only produce totally electric cars in Brazil, but also hybrids that work partially with the gasoline and ethanol mixture and partially with batteries. “We need to produce what customers are looking for,” said Márcio Renato Alfonso, a Brazilian who worked for many years in an American automaker and is today director of Great Wall Research and Development in Brazil. “High technology with affordable price.”
The arrival of BYD in Camaçari
On Henry Ford Avenue in Camaçari Industrial City, which was once a Ford factory is becoming a BYD factory.
This was Ford’s youngest factory. Every day, since 2001, it has produced hundreds of gasoline -powered cars. Employed about 5,000 workers. It also accumulated huge damage.
In 2021, the Ford factory closed.
“It was a shock,” said Júlio Bonfim, who was president of the factory metallurgists’ union. “I imagined that my son would work there too. It didn’t happen.”
The state government offered BYD an incentive package to take over the factory. But almost soon after the arrival of the Chinese company, she got involved in a labor scandal.
In December, to maintain 163 Chinese workers in “conditions analogous to slavery” and in violation of Brazilian labor laws. The case symbolizes the challenge that Chinese companies face by expanding in Brazil, a country with strong unions.
The workers were sent back to China. The construction slowed down. Company representatives said they hope to start production later this year. When this happens, the Bonfim Union insists that Brazilians should be hired to work on the production line. The entity threatened strike if Chinese workers are brought.
Alexandre Baldy, BYD’s main executive in Brazil, said the company took steps to correct the irregularities. In May, the Labor Prosecutor’s Office filed complaints against the automaker and its contractors for trafficking in persons. The company said it intends to contest the accusations.
Meanwhile, the Great Wall factory in Iracemápolis must be practically in full operation. An inauguration ceremony is scheduled for August. The cars should start leaving the assembly line soon after.
The factory initially plans to produce a hybrid model and three plug-in hybrids.
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