China's Electric Surge: Automakers Overtake Hesitant Europe in South American EV Race

South America - Ekhbary News Agency

China's Electric Surge: Automakers Overtake Hesitant Europe in South American EV Race

South America's automotive sector is at a pivotal moment, witnessing a dramatic shift in market dynamics driven by the assertive expansion of Chinese electric vehicle (EV) manufacturers. While European automakers grapple with trade uncertainties and slower market penetration, Chinese brands are rapidly gaining ground, particularly in the burgeoning markets of Brazil and Argentina. This burgeoning competition signals a high-stakes battle for the future of the region's automotive industry, with projections indicating a substantial Chinese market share by the end of the decade.

The heirs to Brazil's prominent auto group, CAOA, Philipe and Carlos Alberto Andrade, represent a new generation of leadership eager to embrace the EV revolution. CAOA, founded in 1979 by their father, Carlos Alberto de Oliveira Andrade, has a long-standing reputation for manufacturing, importing, and selling vehicles in Brazil. The company currently operates an assembly plant in Anapolis, producing models for established Asian brands like Hyundai and Chery, and maintains an extensive dealership network. Recognizing the global shift towards electrification, the Andrade brothers are spearheading CAOA's strategic pivot by announcing plans to commence production for the Chinese brand Changan later this year. This move underscores a commitment to integrating Chinese automotive technology and manufacturing capabilities into their operations, aligning with the broader trend of Chinese EV dominance.

CAOA's Anapolis facility has already demonstrated significant growth, more than doubling its output from 30,000 vehicles in 2023 to approximately 60,000 in the following year, with projections for a further increase to 70,000 vehicles. While the plant operates around the clock, CAOA is still solidifying its position in a highly competitive market. Nevertheless, industry analysts foresee a profound transformation in the Brazilian automotive landscape. A study by Bright Consulting, a respected market analyst based in Campinas, São Paulo, forecasts that by 2030, one in every five new cars sold in Brazil will be of Chinese origin. This projection highlights the accelerating pace of Chinese EV adoption and market penetration.

The narrative of Chinese automotive ascendancy is not confined to Brazil; Argentina is also experiencing a similar influx. On January 20, the specialized Chinese car carrier BYD Changzhou made its inaugural call at the Port of Zarate in the Buenos Aires province. This purpose-built vessel, designed to transport up to 7,000 vehicles, reportedly discharged 5,841 units, comprising fully electric models and hybrid SUVs. BYD, globally recognized as the largest electric vehicle maker by sales volume, commenced its Argentine marketing efforts last year. Notably, the company has opted for a wholly-owned subsidiary model, maintaining extensive control over its value chain rather than forming partnerships with local entities. This strategy allows BYD to meticulously manage its brand presence and operational efficiency.

BYD has set an ambitious medium-term target of exporting 50,000 vehicles annually to Argentina. This objective is strategically aligned with the recent policy shifts enacted by Argentina's libertarian President, Javier Milei. President Milei's administration has been actively liberalizing the market for hybrid and electric vehicles, introducing an annual quota of 50,000 vehicles that can be imported without incurring the standard 35% import tariff. This preferential tariff regime could extend through 2029, potentially allowing up to 250,000 vehicles to enter the country duty-free, creating a significant incentive for Chinese manufacturers like BYD.

The surge in EV sales is also evident in other Mercosur member states, such as Uruguay. The Uruguayan Automobile Association (ACAU) reported a remarkable 147% increase in EV sales in 2025, according to its annual review. This regional trend underscores a growing consumer appetite for electric mobility across South America, a demand that Chinese automakers are adept at meeting with competitive pricing and advanced technology.

The burgeoning presence of Chinese vehicles is intensifying competition across the Latin American automotive market. European automakers had pinned their hopes on a recently signed free trade agreement between Mercosur and the European Union to bolster their position in key markets like Argentina, Brazil, Paraguay, and Uruguay. However, the European Parliament's decision to refer the agreement to the European Court of Justice (ECJ) for legal review has cast a shadow of uncertainty over its implementation. While the deal is expected to be applied provisionally, this legal scrutiny introduces significant uncertainty and raises questions about Europe's reliability as a trade partner.

Representatives from Germany's auto industry association, VDA, have expressed concerns about the implications of this delay. A VDA spokesperson noted that an EU-Mercosur agreement would have unlocked substantial opportunities by reducing high Mercosur tariffs, which currently range from 14% to 35% on vehicles and parts. Simultaneously, EU tariff reductions would have fostered new export avenues for Mercosur countries, contributing to their economic development. Following the European Parliament's referral of the deal to the ECJ on January 21, VDA President Hildegard Müller described the vote as a "disastrous signal" that could delay the agreement's entry into force by years. She urged for swift clarity regarding the provisional application of the deal.

German automotive companies have a significant footprint in the Mercosur region, operating 310 sites, many of which are supplier facilities contributing to local employment. In the first half of 2025, German manufacturers produced 289,200 passenger cars within Mercosur, primarily in Brazil and Argentina, while exporting 18,400 vehicles from Europe to the region during the same period. As global automotive competition intensifies and geopolitical dynamics evolve, the balance of power in South America's automotive markets is rapidly shifting. The battle for dominance has unequivocally begun, with China emerging as a formidable frontrunner.

Ekhbary News Agency