Great Wall Motors invests US$1.9 billion in Brazil as global expansion accelerates

Great Wall Motors will invest $1.9 billion in Brazil to produce electric and hybrid vehicles over the next decade, the latest example of China’s auto industry expanding overseas.

The Baoding-based group said it will open its largest operation outside China at a former Mercedes-Benz factory in the interior of the state of São Paulo, serving as an export hub for Latin America.

The launch of a joint venture by one of China’s largest automakers in Brazil follows a series of deals in Latin America focused on mining, material processing and production assets in the electric vehicle supply chain, an industry that Beijing has prioritized.Parts of the area are Rich in Lithium and Coppera metal critical to electric vehicle production.

Great Wall’s investment is expected to boost Brazil’s auto industry economic slowdown. Ford leaves Brazil last year After decades of manufacturing in the country.

Great Wall has pledged to create 2,000 jobs and an annual production capacity of 100,000 cars.

The first phase, with an investment of around 4 billion reais ($740 million) until 2025, will focus on retrofitting and upgrading production lines at the factory in Iracemápolis, 140 kilometers from the state capital . The second phase will involve funding of 6 billion reais ($1.11 billion) in 2032.

Great Wall said it will also launch a product line in Brazil consisting of only hybrid and electric SUVs and pickup trucks, which will be imported before the first cars roll off the production line in South America next year. The company said it expects an annual turnover of 30 billion reais in 2025.

“This is the first plant in Latin America dedicated to the production of hybrid and electric vehicles,” said Pedro Bentancourt, director of government relations at Great Wall Brazil.

Tu Le, managing director of Sino Auto Insights, said international expansion has become a priority For China Automobile Group, in addition to Great Wall, it also includes BYD and Geely.

Another major Chinese automaker, Geely, also plans to enter the Brazilian market this year, a spokesman told the Financial Times.

These companies are looking for markets because China is the world’s largest auto market, slow down. They are also working to strengthen supply chain resilience in the wake of the trade war with the U.S. and the shock from the coronavirus pandemic.

“Affordable [electric vehicles] If local governments can be pushed to invest in infrastructure, in Latin America, this seems to be a winning formula,” Tu said.

The overseas transformation of Chinese EV makers reflects “collective confidence”. . . they can finally compete on an equal footing with all foreign automakers,” he added.

Currently, the electric vehicle market in Brazil is relatively limited. Most cars sold in the country have “flex” engines that can run on both gasoline and ethanol, the latter produced domestically from sugar cane.

All of Great Wall’s products in Brazil will be flexible, Bentancourt said, adding that the company intends to source 60 percent of its auto parts from local suppliers by 2025.

Milad Kalume Neto, director of business development at JATO Dynamics, noted that Great Wall is not looking forward to mass adoption.

“They’re going to be niche cars. They don’t think about volume,” he said. While Brazil’s electricity market is growing, “it’s less than 1% of the fleet”.

Additional reporting by Carolina Ingizza and Nian Liu

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