[Big read] Chinese EVs blaze the way for green tech in Brazil

“It was love at first sight when I started driving this bus.” Alexandra, who drives a Green Line city bus in the city of São José dos Campos in São Paulo, describes the electric bus she drives as a lover.

Alexandra has previously driven lorries and diesel buses, but the high-tech electric bus is her favourite. Pointing to the high-resolution video camera beside the driver’s compartment which allows her to see the rear, she told me excitedly, “This is the best rear-view mirror I’ve seen.”

The Green Line that Alexandra serves was started in late 2021. As the first route in Brazil to feature only electric buses, each bus sports “100% electric” decals on its windows to highlight its eco-friendliness. 

The modern design of the electric bus is eye-catching, and if one did not look closely at the small logo in front, one would not have realised it was produced by Chinese company BYD, which worked with the municipal government of São José dos Campos to provide 12 electric buses for the Green Line under its green public transport initiative.

While many commuters did not think too much and were not sure about the make and country of origin of the buses, almost all of them were positive about their experiences on the Green Line.

Commuter Elise Angela said, “I enjoy taking the green line because it is faster, has its own dedicated lane, and is air-conditioned and more cooling than regular buses.”

In the last few years, a growing number of Latin American commuters like Angela are being served by Chinese electric buses. Based on estimates from Latin American public transport information platform E-Bus Radar, Brazil and Latin America have 686 and 6,057 electric buses operating, including vehicles from many Chinese brands, like BYD, Foton Motor, Yutong Bus and Zhongtong Bus.  

As electric buses and other electric vehicles (EV) become more commonplace in Latin America, an increasing number of locals are coming into contact with new energy tech products from China. Generally, Chinese businesses involved in EVs, lithium batteries or photovoltaic products are seeing a rapid influx into Latin America. 

Data from the Atlantic Council indicate that China exported some US$5 billion worth of green tech products to Latin America in 2021, and in 2023 this nearly doubled. For the 12-month period as of August 2024, Latin America accounted for 10% of the “new three” — EVs, lithium batteries and photovoltaic products — China exported. 

There are both political and economic reasons for the rapid domination of Latin American markets by Chinese green tech.

When interviewed, Marcos Cordeiro Pires, a professor of political economy at the São Paulo State University, explained that a transformation to the green economy is underway in many Latin American countries. The main objective of doing so is to take advantage of the energy transition to reindustrialise their economies and create an economic model that is not dependent on the export of low-value-added commodities.

Right now, investments by China in clean energy generation, its processing of critical minerals from Latin America and the entry of Chinese industrial companies into the region present opportunities for countries there to move to more sophisticated value chains and generate higher-skilled jobs for their people. 

For China, makers of green tech products that have faced repeated setbacks in Western markets recently. Since September 2024, the US has imposed eye-watering tariffs of between 25 and 100% on Chinese EVs, solar energy batteries, steel, aluminium, EV batteries, and critical minerals; in October 2024, the EU also approved additional tariffs of between 7.8 and 35.3% on Chinese-made EVs. Given these restrictions, Latin America has been an important breakthrough point for Chinese companies.

When interviewed, Professor Cui Shoujun, director of the Renmin University of China’s Institute of International Development Studies, said that the rapid developments made by Chinese companies in clean energy sectors like wind and solar energy over the past few years mean that they now have world-class technologies and enjoy a significant price advantage. 

He also feels that many development initiatives China champions are aligned with the goals of Latin American countries to move up the value chain, industrialise and modernise. For Cui, China is in fact leading the green transformation in Latin America.

Cui further observed that initially, China-Latin America cooperation was mainly in trade, but in the last few years, there is a growing trend of Chinese companies setting up factories there. Such construction projects involve considerable investments, reflecting the optimism of Chinese companies on the potential demand from the region’s green transformation.

In Camaçari, BYD acquired the premises vacated by Ford Motor when it shuttered its automotive factory there in 2021. It was then converted into BYD’s first EV factory outside Asia. When the factory starts operating at the start of this year, its annual production is estimated to be 150,000 vehicles initially.

Brazil is now BYD’s largest overseas market, and it is no exaggeration to say that the Chinese automotive company has turned the local market on its head in the last year or two. According to reporting by Brazil’s Rio Times, BYD accounted for 71% of all vehicles that Brazil imported in the first three quarters of 2024 as its sales surged by as much as 742% as compared to the same period in 2023. 

In response to queries, Tyler Li, president of BYD Brazil, said that BYD seeks to consolidate the Brazilian market and try to expand, through Brazil, to the Latin American market. It aims to produce bus chassis locally, to be able to access local credit lines and try to reduce the cost of vehicles in the medium to long term.

On the whole, Chinese companies have diverse investments in the Latin American green sector. On the one hand, infrastructural investments from big companies like the State Grid Corporation of China and the China Three Gorges Corporation in hydroelectric, solar energy and wind energy are catalysing regional energy transformation. On the other, as consumer goods like EVs and solar energy panels become commonplace, Chinese green tech is also becoming more visible in Latin America.  

At the same time, some Chinese companies have used marketing or corporate social responsibility projects to showcase their intentions and abilities to improve the lives of locals. For example, Longi, a Chinese solar energy company, has been working with Revolusolar, a Brazilian non-profit organisation, since 2021 to help residents in the favelas of Rio de Janeiro reduce their electricity bills through solar energy tech. On its company website, Longi reiterated its aim to enable those in developing and underdeveloped countries and regions to access affordable clean energy sources. 

In developing countries, China is fighting for market share and recognition from the locals through its cheaper tech products. While Brazilians are not fans of Chinese tech, at least it is not rejected.

São Paulo resident Sheila Appollo said: “In the past, when people mentioned Chinese cars, they would think about the budget QQ model from Chery and associate them with poor quality; nowadays, they don’t think like that anymore. Also, even though branding is important, people don’t necessarily think about the country where the brands originate from. For instance, some car buyers may not realise that BYD is a Chinese brand before making their purchases.”

When I visited a BYD showroom in São Paulo, a female local who declined to be named purchased an EV for 200,000 reais (US$32,700). When interviewed, she said: “Chinese brands are everywhere now, so I kind of trust in them. Of course, the quality of Chinese products varies, the cheaper ones may break down easily, but the higher-priced ones are generally of better quality.”

The surge in China’s export of the “new three”, Chinese companies building factories in Latin America, and the greater exposure to and increased usage of Chinese brands by Latin Americans all point to the growing influence of Chinese green tech in the region, which has drawn the attention and suspicions of the US. 

One concern is over the security risks posed by Chinese green tech. In February 2024, US President Joe Biden gave orders to investigate connected vehicles imported from China due to worries that they may be using advanced technology to collect sensitive data about drivers and passengers, or even engage in espionage.

Another point of contention is the overcapacity in Chinese green tech. Previously, US Treasury Secretary Janet Yellen criticised China for its overproduction of EVs, lithium batteries and photovoltaic products, and warned that this could cause trouble for companies from the US and other countries as well as harm the interests of workers around the world.

In an article in Dialogo Americas, a military magazine of the US Southern Command, Evan Ellis, a research professor of Latin American studies at the US Army War College, warned that China’s dominance of green energy sectors and technologies also gives it enormous leverage over the actions and discourse of governments and the private sector, and that a global green energy transition in which China-based companies dominate the technologies and products that Western governments are moving to at great cost, would greatly accelerate the transfer of wealth from the West to China. 

As the US has always viewed Latin America as its backyard, São Paulo State University’s Pires feels that the US will continue to apply intense pressure to block greater cooperation between Latin America and China due to geopolitical concerns. These pressures could increase with the inauguration of Donald Trump on 20 January 2025.

Other than to cope with competition from China, the US is also furthering new energy cooperation with Latin America out of energy security concerns. Last November, during the G20 summit held in Brazil, the leaders of both countries announced a new Brazil-US Partnership for Energy Transition to accelerate clean energy deployment and expand energy supply chain development. The White House also underlined that Brazil and the US have “immense potential to lead the global energy transition”.

Some Latin American countries have also responded to the risks identified by the US. In Brazil, embattled local car manufacturers facing fierce competition from Chinese EV makers have successfully petitioned the government to reinstate tariffs that were previously removed to promote EV development in the country. Such tariffs on EVs will increase to 35% by 2026. 

Similarly, Mexico ended its zero-tariff policy for the import of EVs in October 2024. As a result, Chinese EVs will face tariffs of between 15 and 20%. Such tariffs will indirectly encourage Chinese automotive companies to set up production plants in Latin America, boosting local industrial activities and creating jobs.   

When interviewed, Maurício Santoro, a political studies professor at the Rio de Janeiro State University, said that while the Chinese government clearly does not welcome the tariffs, it understands how important Brazil is from a political point of view. Hence, it is willing to accept some economic costs in order to maintain friendly ties with Brazil. 

He added that after the pro-China Luiz Inácio Lula da Silva was re-elected to the Brazilian presidency in 2023, Brazil and China have moved closer together as Lula understands China’s enormous influence on Brazil’s economy. 

Great power rivalry and a complicated operating environment mean that things may not be smooth-sailing for Chinese companies in Latin America.

In December 2024, Brazilian authorities refused to issue new temporary work permits to BYD due to the “slavery-like environment” uncovered at the car factory it is building in Camacari, Brazil. The incident reflects the legal and cultural differences, and inherent risks that Chinese companies face in Latin America.

Rio de Janeiro State University’s Santoro added that foreign companies (including Chinese ones) also face uncertainties due to the economic problems in Latin America, such as rising inflation and currency depreciation in Brazil, which would impact their earnings.

Even in promising sectors like solar energy, there may be problems of inadequate synergies or cutthroat competition among Chinese companies. A Chinese businessman in Brazil who declined to be named said that even for high tech and high value goods like solar panels, having too many players in the industry results in price wars that extend from China to overseas, making it difficult for any company to break free.

Even though China and Latin America are cooperating in the green economy, Chinese investments in the region are still embroiled in environmental controversy from time to time. For example, they are accused of damaging ecosystems and affecting the lives of local residents.

Deforestation in the Amazon Rainforest is one such controversy. China is the main importer of Brazilian beef and soybeans, and some blame robust Chinese demand for causing Brazil to accelerate the clearing of its forests to set up pastures and farmlands. From China’s perspective, Western countries are just as culpable, since goods derived from cutting down rainforests are also exported to these countries.

Chinese-backed infrastructure projects have also been mired in controversy. In Ecuador, the Coca Codo Sinclair hydroelectric power station which was built by Chinese companies and commissioned in 2016 has been accused of indirectly causing the demise of a natural waterfall in its vicinity. In response, Chinese state media claimed that the reporting by Western media was politically motivated and an attempt to harm ties between China and Latin American countries.   

While Chinese investments in Latin America are often criticised over environmental issues, it is also true that Chinese tech has won greater recognition for its contribution towards the region’s green development efforts over the past few years. Rio de Janeiro State University’s Santoro explained, “China’s influence in terms of the Brazilian environment, it has many contradictions. I would say that in general, it’s a positive relationship that Brazil is gaining a lot from Chinese investments, from Chinese trade, but it also has some bad effects.”  

Citing the Amazon rainforest as an example, Santoro said that products of the agribusiness from the midwest of Brazil need to pass through the Amazon to reach the Atlantic to access global consumers, so Brazil needs to build railroads and highways in the rainforest. Even though Chinese money is providing support for these projects, it is also creating problems for the communities in some small towns.

However, Santoro also observed that Chinese companies have become more sensitive to environmental issues in recent years, especially in agribusiness where some companies are implementing environment-friendly policies like only purchasing soybeans from Brazilian farms that abide by local deforestation laws.   

He also pointed out that perhaps due to the mixed reactions to China, many Chinese companies tend to be rather discreet in Brazil. For example, some Chinese state-owned enterprises choose to preserve the original names of the Brazilian companies they acquire so that consumers do not know they are buying from a Chinese company. “I think the Chinese companies… are being careful because they don’t want a political backslap. They don’t want the political reaction to their growing influence in Brazil.”

This article was first published in Lianhe Zaobao as “中国电动车一路绿能 开进巴西一片绿灯”.

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