Dealers and ports: how the Chinese auto industry is taking over Latin America

While Tesla is unable to establish sales of electric vehicles in Latin America, new Chinese electric brands have flooded dealerships in Peru, Chile and Brazil. The secret to success is the new megaport and the ability to work with local partners.

What's happening

When Peruvian entrepreneur Luis Zwiebach decided to buy an electric car in 2019, he had to fly to California to test the Tesla Model 3, says Reuters. The company did not have an importer in Peru, and bureaucratic obstacles made importing on its own almost impossible.

As a result, Zwiebach found the only Tesla owner in the country and bought the car from him. But even charging it in a suburban house without reliable grounding turned out to be a difficult task - the third wire had to be wound from a regular plug stuck into the ground.

Today the situation has changed. Tesla still does not have a showroom, but the market is filled with affordable Chinese models - BYD, Geely, GWM and others, which are on average 40% cheaper than their American competitor. Hybrids and electric cars in Peru are sold at a record pace - 7,256 from January to September (+44% year-on-year), although so far this is a modest 5.4% of all new cars sold in the country during this period.

In total, according to the International Energy Agency, the share of electric vehicles in the Latin American fleet has doubled to 4% by the end of 2024. But new registrations speak more clearly about the dynamics: in Chile, electric vehicles accounted for 10.6% of registrations (September), in Brazil - 9.4% (August), in Uruguay - 28% (third quarter), according to data from local automobile associations and consulting companies.

In Chile, Chinese brands confidently occupied a third of the new car market (33% by July). In Uruguay, their share has grown from 10% in 2023 to the current 22%, and BYD has become the third most popular brand, behind only Chevrolet and Hyundai. In Argentina, which has a long history of defaults, BYD entered the market for the first time in October. The company is the leader in sales of electric cars in Brazil, Colombia and Ecuador.

Why so

The main springboard for the Chinese automobile industry is the Chancay megaport near Lima, which opened a year ago. Built with the participation of China (its investments are estimated at $1.3 billion), the port has halved the delivery time for this specific cargo between countries. Each ship brings from 800 to 1200 cars. In July alone, 3,057 vehicles arrived at the port compared to 839 in January. Chinese logistics company Cosco (the majority owner of the project) expects that by the end of the year the total number of cars arriving from China will reach 19,000. And most importantly, the port has become a “regional hub” from where cars are sent further to Chile, Colombia and other Latin American countries. A second major distribution hub is already emerging in Brazil, the port of Itajaí, where some 22,000 vehicles have been unloaded this year.

Secondly, Chinese companies are integrating into the local dealer network and adapting to regional tastes. They partner with local banks to secure loans and run prize drawings. For example, by the end of this year, BYD plans to open its fourth dealership in Lima, and Chery and Geely together already have more than a dozen showrooms throughout Peru.

Thirdly, in China itself there is now a tough price war going on, factories are operating with overproduction. Chinese manufacturers have practically lost access to the American market, and the EU has tightened trade restrictions. Therefore, the “surplus” is sent to regions where there are fewer barriers, including Latin America. And at affordable prices. For example, in Uruguay, new electric cars from BYD start at $19,000 - for the price of two pickup trucks from well-known brands, you can buy three from Chinese manufacturers, dealers say.