(Yicai Global) July 10 -- Latin America has long been a major export market for Chinese fuel vehicles, but more opportunities are emerging as the continent makes a belated transition to new energy vehicles.

Latin America lags far behind global NEV sales, despite being the world's fifth-biggest auto market. In Brazil, Mexico, and Chile, NEVs made up just 2.5 percent of total car sales last year. The global average is 14 percent, and in China it is 25 percent. 

But governments in countries including Brazil and Argentina are offering NEV stimulus polices, in areas such as purchase tax, ownership tax and tolls, as well as offering energy efficiency credits for car firms. In Mexico, electric vehicles are totally exempt from tariffs.

The government of Chile has announced that sales of fuel cars will be banned by 2035. Colombia, Puerto Rico, and Panama have also announced various targets for new energy products, said Dai Qiang, director of Great Wall Motor's Brazilian strategy department.

As a result, local NEV markets are starting to see rapid growth. Brazil posted NEV sales of 49,245 last year, up 41 percent from 2021, and growth of 75 percent is expected this year.

NEV exports by Chinese carmakers to Latin America are still in the initial stages, according to Sun Xiaohong, secretary general of the auto unit of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products. In the first five months of this year, a total of 10,000 all-electric cars were exported at an average price of USD19,000 each. The exports were mostly small, low-end electric passenger cars.

But Chinese automakers are increasing their efforts in local NEV markets. For example, GWM, which bought Daimler's Brazilian plant in 2021, introduced its first NEV product in the country this March, and deliveries started in May. It also plans to offer four sport utility vehicles, three pickups, and two all-electric models in Latin American markets.

China and Latin America should work together deeply in battery raw materials, according to Yang Weiqi, president of Latin American markets for GWM, who also advised local governments to encourage construction of charging piles, as well as maintaining stable new energy policies.

Supply chains for products made in China and other Asian countries are being moved to the United States or places close to it amid efforts by the US government to re-model supply chains, the CCCME’s Sun pointed out, adding that the trend of moving production to Mexico is strong at the moment.

China is likely to export over one million cars to Latin America this year, and the NEV penetration rate could rise to about 10 percent, or 100,000 units, Sun noted. GWM, Chery Automobile, JAC Motors, and SAIC Motor all sell there, and China exported 772,700 cars to the region last year, making up roughly a quarter of the total exported.

Editor: Tom Litting