In Depth: How BYD Is Navigating Tariffs and Regulations in Brazil’s Auto Market

[para. 1] In early December at BYD's São Paulo office, Li Tie, general manager of BYD’s Brazil division, reflected on the journey since his initial visit to Brazil in 2013. At that time, alongside company Chairman Wang Chuanfu, he met with São Paulo’s then-governor Geraldo Alckmin, now the country’s vice president. Brazilian officials showed keen interest in BYD’s electric buses early on, though entering the passenger vehicle market turned out to be a far more challenging and gradual process due to market barriers, cultural differences, and regulatory uncertainty[para. 1][para. 2][para. 3].

[para. 4] Brazil, the world’s sixth-largest auto market with over 2 million new cars sold annually, is undergoing a major shift from combustion engines to electric vehicles (EVs). For BYD, this transition forces careful navigation of rising tariffs, complex bureaucracy, and intense competition. Recognizing this, BYD is investing 5.5 billion reais (about $996 million) in Brazilian manufacturing—a gamble that will determine its ability to replicate its domestic success in one of the world’s toughest emerging markets[para. 4].

[para. 5][para. 6][para. 7] BYD’s initial entry into Brazil in 2014 focused on electric buses and solar panels, building up a foundation before addressing passenger vehicles due to high entry barriers, particularly rising import taxes on gasoline cars. Instead of following the traditional Chinese strategy of exporting low-cost vehicles, BYD waited. The breakthrough came in 2021 with the launch of its advanced plug-in hybrid technology, enabling BYD’s expansion into the overseas passenger car market. In July 2023, BYD announced a 5.5 billion-real investment in a production complex of three factories—dedicated to bus and truck chassis, battery materials, and an annual capacity of 150,000 electric and hybrid cars. The first cars from this complex rolled off the line in July 2025[para. 8].

[para. 9][para. 10][para. 11][para. 12] Changes in Brazilian policy prompted BYD’s heavy investment. After years of zero import tariffs on pure EVs, Brazil began raising duties starting in January 2024; by July 2026, tariffs on imported EVs and hybrids will reach 35%, equal to gasoline cars, pressuring automakers to manufacture locally. The Brazilian government justifies tariffs as tools for balancing trade and fostering local industry. Meanwhile, the Brazilian NEV market is expanding: in H1 2025, sales of light-duty NEVs rose 9.5% to 86,800 units, comprising 8% of light vehicle sales; BYD itself sold 99,500 units in the first 11 months—a 49% year-on-year jump, making it Brazil’s top EV brand[para. 13].

[para. 14][para. 15][para. 16][para. 17][para. 18] BYD’s best sellers in Brazil are the Seagull and Dolphin compact EVs, benefiting from reasonable pricing and advanced features. The company’s partnership with ride-hailing company 99 (part of Didi) and Uber results in fleet deals and energy cost savings, making EVs attractive, especially given Brazil’s abundant sunshine, which promotes solar charging. High resale values further incentivize drivers. Advertising on Globo TV and presence at auto shows have raised brand awareness, and BYD’s launch of higher-end models signals its aspirations upmarket. Brazilian consumers’ strong acceptance of EVs and hybrids is aided by a consensus on environmental protection and local biofuel use[para. 19].

[para. 20][para. 21][para. 22][para. 23] Despite achievements, BYD faces challenges from Brazil’s complex three-tiered tax system and rigid logistics rules. Hundreds of tax scenarios and requirements for physical shipment invoices make operations cumbersome and risky—unlike simpler systems in China[para. 24].

[para. 25][para. 26][para. 27][para. 28][para. 29] Long-term success for BYD depends on localization: designing products for Brazilian needs, producing locally, and adapting to local biofuel blends and road conditions. While the new Camaçari plant is producing key models, the EV supply chain for batteries and electronics is still weak locally, requiring imports from China in the interim. Finally, Brazil serves as a hub for BYD’s broader Latin American strategy by leveraging Mercosur, a trade bloc allowing tariff-free movement of locally produced goods, positioning BYD to export regionally[para. 29].