BYD: compensation to Ford could reach BRL 150 million – 08/18/2023 – Market

The government of Bahia has a preliminary assessment that the amount to be reimbursed to Ford for the resumption of the vehicle factory targeted by the Chinese BYD in Camaçari is around R$ 100 million to R$ 150 million, said this Thursday. Governor Jerônimo Rodrigues told journalists.

Ford announced last week an agreement to revert the ownership of its industrial complex in Camaçari to the state of Bahia, stating that the process will occur upon reimbursement of investments made by the automaker in the area.

At the time, the American automaker did not disclose the amount that would be charged from the Bahian government for the return of the unit. Since at least last year, Ford, BYD and the government of Bahia have been holding parallel discussions about the factory closed by the American automaker in Camaçari in 2021.

BYD had expected to announce at the end of last year a definitive agreement for the installation of a factory complex initially formed by an electric car factory, which would be expanded to include production lines for electric buses and trucks and also for assembly of batteries for vehicles.

“We are at the stage of assessing the amount they invested so that we can reimburse (Ford) and already see with BYD what the delivery condition (of the Camaçari complex) will be”, said the governor. According to him, the land occupied by Ford belongs to the state. Caixa Econômica Federal was hired by the government of Bahia to evaluate the reimbursement, said the governor.

“It was a value that we heard about the negotiation (between Ford and BYD). So, for us, it will be a parameter”, explained the governor. Sought in Brazil, Ford could not immediately comment on the matter.

Rodrigues stated that the expectation is that BYD will be able to kick off investments of around R$ 3 billion in the state in October, when the brand’s global president, Wang Chuanfu, will come to Bahia to lay the cornerstone of the factory.

“The commitment we’ve heard from BYD is this,” Rodrigues said, adding that production could start between October and November next year. “We will try to make an effort so that they can anticipate the start of production.”

State seeks to extend incentives

At the same time, the government of Bahia is seeking, together with other states in the Northeast and Midwest, the extension of tax incentives granted to the automotive sector in these regions, from 2025 to 2032, something that is currently not contemplated in the tax reform.

“We are not looking only at BYD, it is clear that BYD is already well under way, but we would like this tax reform to create a favorable environment for negotiation. We are dialoguing with our bench, with the Workers’ Party, with the federal government , to see with the senators, to try to help us,” said Rodrigues.

“If it’s not 2032, at least we have a breath for those who come to invest now”, said the governor, suggesting the possibility of extending the tax benefit regime until 2025 or 2027.

“What BYD put in for us, we are attending to”, said the governor, citing discussions so that the port of Aratu, which is close to the industrial center of Camaçari, can also be used by the Chinese automaker for its production processes. import of inputs and export of finished vehicles.

Former Minister of Cities and special advisor of BYD in Brazil, Alexandre Baldy stated that if it is not possible to renew the tax benefits for a longer period “there may be surprises” regarding the amount to be invested by the company in Bahia.

Questioned about the company’s interest in Brazil, especially at a time when the automotive market has suffered from reduced demand and high interest rates that make sales difficult, Baldy said that the company considers the country to be its main focus for investment outside China.

“We want Brazil as a production hub in South America for electric and hybrid vehicles,” he said, commenting that despite Brazil’s complexities, the company remains interested in investing in the country.

Factory promise to produce 150,000 cars a year

Last October, BYD and the government of Bahia signed a memorandum of understanding for an investment of BRL 3 billion in the state over five years. The expectation was that the agreement would be concluded by December of the same year, but until today the company has not officially defined the location.

In July of this year, the company announced plans to build an industrial complex in Camaçari during an event in Bahia and said that the facility will house an electric car factory with the aim of having a production capacity of up to 150,000 units per year after future expansions.

In the same month, the company promoted an event in Bahia stating that it will build an industrial complex in Camaçari (BA) and that the installation will house an electric car factory with the objective of having a production capacity of up to 150 thousand units per year after expansions. .

A battery assembly unit and another for bus and truck chassis will also be installed in the complex, according to the company, which currently concentrates operations in Brazil in Campinas (SP) and Manaus.

Manufacturer of electric cars, trucks and buses, as well as batteries for other automakers and products such as photovoltaic modules, BYD is now competing with the North American Tesla for global leadership in the production of electric cars.

Earlier this month, BYD announced July sales of 262,161 vehicles. The volume is greater than the vehicle licensing of all automakers in Brazil, which last month registered 225,600 units in the country.

In the accumulated result for the year, the Chinese automaker had sales of 1.5 million vehicles, more than the licensing of all vehicle manufacturers in Brazil in the same period — 1.22 million units, according to data from the sector association, Anfavea.