Great Wall Motor injects $1.9 billion into Brazil as global expansion gathers pace

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

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

The Brazilian venture of one of China’s largest automakers follows a series of Chinese deals in Latin America focused on mining, materials processing and production assets in the vehicle supply chain electricity, a priority industry for Beijing. Parts of the region are rich in lithium and copper, metals essential for the production of electric vehicles.

Great Wall’s investment is expected to boost Brazil’s auto sector, which has suffered shutdowns and job losses as the economy slowed. Ford left Brazil last year after decades of manufacturing in the country.

Great Wall is committed to creating 2,000 jobs and the capacity to produce 100,000 vehicles per year.

A first phase of investment of around 4 billion reais (740 million dollars) until 2025 will focus on adapting and modernizing the production line at the Iracemápolis plant, 140 km from the state capital. The second stage will involve 6 billion reais ($1.11 billion) of funds until 2032.

Great Wall has announced that it will also launch a product line in Brazil comprising only hybrid and electric SUVs and pickup trucks, which will be imported before the first cars roll off the factory lines at the South American plant. next year. The company said it expects to generate annual revenue of R$30 billion in 2025.

“This is the first plant dedicated solely to hybrid and electric cars in Latin America,” said Pedro Bentancourt, government relations director for Great Wall in Brazil.

Tu Le, general manager of Sino Auto Insights, said international expansion has become a priority for Chinese auto groups, including BYD and Geely in addition to Great Wall.

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

Companies are looking for markets as growth in China, the world’s largest auto market, slows. They are also working to build supply chain resilience following shocks caused by the trade war with the United States and the coronavirus pandemic.

“Affordable [electric vehicles] in Latin America seems like a formula for success if local governments can be pushed to invest in infrastructure,” Tu said.

The offshore pivot of Chinese electric vehicle manufacturers reflects “collective confidence. . . that they can finally compete on an equal footing with all foreign car manufacturers,” he added.

Currently, the market for electric vehicles in Brazil is relatively small. Most cars sold in the country have “flexible” engines that can take both gasoline and ethanol, which is produced locally from sugar cane.

All of Great Wall’s offerings in Brazil will be flexible, Bentancourt said, adding that the company aims to have 60% of vehicle content from local suppliers by 2025.

Milad Kalume Neto, director of business development at JATO Dynamics, noted that Great Wall did not expect mass adoption.

“These will be niche vehicles. They don’t think about volume,” he said. While the electricity market in Brazil was growing, “it does not reach 1% of the park”.

Additional reporting by Carolina Ingizza and Nian Liu

Video: Cars, companies, countries: the race to go electric
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