Automaker investments in Brazil - jobs and tax credits for cars

BYD announces three factories in Brazil to produce electric vehicles

Chinese brand will take advantage of the structure left by Ford in Bahia and will be the first automaker to produce electric cars i...

    BYD announces three factories in Brazil to produce electric vehicles
Chinese brand will take advantage of the structure left by Ford in Bahia and will be the first automaker to produce electric cars i...
   

    -@Marcelo de Paula

Are those the old Ford plants in Camaçari?

Jeep (Fiat) opened a huge new plant not far from me in Pernambuco about 6 or 7 years ago, and have enormous untapped capacity there, as they are using only a small part of the whole project. I would not be surprised if they are in on this new incentive.

    Jeep (Fiat) opened a huge new plant not far from me in Pernambuco about 6 or 7 years ago, and have enormous untapped capacity there, as they are using only a small part of the whole project. I would not be surprised if they are in on this new incentive.
   

    -@Peter Itamaraca

Is this the new plant in Goiana?  Or in the FCA in Jaboatão dos Guararapes?  It appears that the plant will focus on the Flexfuel or E85 gas engine platforms.

        Jeep (Fiat) opened a huge new plant not far from me in Pernambuco about 6 or 7 years ago, and have enormous untapped capacity there, as they are using only a small part of the whole project. I would not be surprised if they are in on this new incentive.        -@Peter Itamaraca

Is this the new plant in Goiana?  Or in the FCA in Jaboatão dos Guararapes?  It appears that the plant will focus on the Flexfuel or E85 gas engine platforms.
   

    -@Pablo888

They are both connected. Main plant is in Goiana, (which an American electrical engineer friend of mine helped set up), but they also have offices in Jaboatão dos Guararapes. I guess they probably employ 10,000 in this area, and have huge capacity for more.

Thank you @peter_itamaraca. 

Great that manufacturing is ramping up there.  Hopefully car prices will go down. ;-)

@Pablo888

There are 4 problems that drive up the price of cars in Brazil, compared to, say, Mexico:

1/ High taxation by government

2/ High profitability by the companies

3/ Low productivity by the Brazilian workforce, caused by cultural and bureaucratic forces

4/ Zero imported competition caused by import laws

    @Pablo888There are 4 problems that drive up the price of cars in Brazil, compared to, say, Mexico: 1/ High taxation by government2/ High profitability by the companies3/ Low productivity by the Brazilian workforce, caused by cultural and bureaucratic forces4/ Zero imported competition caused by import laws         -@Peter Itamaraca

Thank you for this nice breakdown of the barriers to getting a lower price car for everyone.

1/ High taxation by government

I think that's why foreign companies are investing in Brazil - to circumvent the import tariffs.

2/ High profitability by the companies

Although it is true that foreign car companies are answerable to share-holders, there are way worse companies out there.

3/ Low productivity by the Brazilian workforce, caused by cultural and bureaucratic forces

This is really the major Brazilian-only made problem.  Increasing automation would help address the imbalance.

4/ Zero imported competition caused by import laws

See response 1 above... If Ford, Stellantis, BYD starts manufacturing in Brazil, I think locally built cars would create a sufficiently competitive landscape for everyone else to benefit.  What do you think?

1/ High taxation by governmentI think that's why foreign companies are investing in Brazil - to circumvent the import tariffs.

From what I have seen, in terms of governments thats the idea Brazil uses to implement job generation and bring money to brazil

2/ High profitability by the companiesAlthough it is true that foreign car companies are answerable to share-holders, there are way worse companies out there.

example - FCA awnsers to no one at the end of the day ( I used to work there )

Like wranglers now versus pre 2010 era are just nightmares for electrical issues and PCB modula replacements which they can find a way to make those non warranty claimable lol

3/ Low productivity by the Brazilian workforce, caused by cultural and bureaucratic forcesThis is really the major Brazilian-only made problem.  Increasing automation would help address the imbalance.

Everyone wants a piece of the pie lol.

4/ Zero imported competition caused by import laws See response 1 above... If Ford, Stellantis, BYD starts manufacturing in Brazil, I think locally built cars would create a sufficiently competitive landscape for everyone else to benefit.  What do you think?   

Ford - unreliable company that jumps bandwagon to save money, so at a moments notice after setting up shop they will close it and go to chile or argentina if its more lucrative in terms of exporting to north america etc.    -@Pablo888

@Mikeflanagan

Would you have taxation to import a car from, say Paraguay?

    @Mikeflanagan
Would you have taxation to import a car from, say Paraguay?
   

    -@Canforbra

What does paraguay have that brazil already does not, Brazil is pro brazil. anything that can be done locally but imported gets taxed always.

*correction, most items imported face tarrifs and taxes regardless. no way to cheat it. and brazil monitors the trades between paraguay for illegal goods, fake items etc ( worse than wish.com )

03/14/24    @Mikeflanagan
Would you have taxation to import a car from, say Paraguay?
   

    -@Canforbra

Southeastern Paraguay lives on duty-free tourism from - and smuggling into - Brazil, so imports from Paraguay come under special scrutiny.  Brazilians boarding domestic flights at Foz do Iguaçu Airport are subject to a 100% Customs check and baggage x-ray to detect dutiable items. So no, no special privileges for Paraguay purchases, especially big ones.

Ford - unreliable company that jumps bandwagon to save money, so at a moments notice after setting up shop they will close it and go to chile or argentina if its more lucrative in terms of exporting to north america etc.    -@Pablo888
    -@Mikeflanagan

IMHO, out of the US Automotive Big 3, Ford is the most "troubled" one because it suffers from cronyism and lack of innovation.  During the last big recession, Ford was the only US automaker that did not want to be bailed out.  FCA (now Stellantis) and GM execs gladly flew their corporate jets to Washington and took the government money.  I suspect that for US automakers to invest in Brazil, this means that there are better incentives available than in the US.

From the news clipping above, it appears that the incentives for Stellantis are related to car lines related to Flex Fuel (ethanol-gas blend) engines.  Since Brazil produces a lot of ethanol, it would make sense for Stellantis to produce Flex Fuel engines in Brazil and for the North American market.  Gasoline engines assembly is very labor intensive and if Brazil is providing some R&D eco-friendly incentives to develop the technology (minor modifications - adjusting for knock, may be compression, and moisture mitigation), ramping production should not be very difficult.  Remember that Citroen and Peugeot and a smattering of European brands are now part of Stellantis. A clear win-win for Stellantis and Brazil here.

BYD - it's purely a plan to do final assembly in Brazil for export - mainly to circumvent any import tariffs in the USA.

Local expats - please look for more Flex Fuel branded features to be available on existing models.  Let me know if you find those on the road.  The Flex Fuel feature used to be a more expensive feature at launch but not any more....  Let us know if you see car prices easing downwards.

Thank you.

well more incentives for renewables and EVs are getting pushed into brazil slowly, but on a steady path, investments between that and petrobras show the changes in spectrums on that.

Flex could work but in the NE primarily you see alot of diesel fueled vehichles. then when you look at top tier. same situation higher quality gas, but for normal joes flex could be an option but I feel this is why people stick to the older vehicles in terms of affordability of fuel.

Flex could work but in the NE primarily you see alot of diesel fueled vehichles. then when you look at top tier. same situation higher quality gas, but for normal joes flex could be an option but I feel this is why people stick to the older vehicles in terms of affordability of fuel.
    -@Mikeflanagan

Great thinking here.  Apparently the investment will be in Pernambuco...  NOx from diesel engines is such a big problem and a greenhouse gas.  I can totally see that an environmentally friendly government making the incentive case to switch from diesel to a more renewable fuel based alternative......

Not sure who came up with the policy decision - but this seems to be an environmentally friendly attempt.  Not sure how well the execution will be and whether this will have the desired effect.

Keeping my fingers crossed for a positive outcome.

The BYD strategy in Brazil is getting clearer -> https://finance.yahoo.com/news/having-o … 00584.html

BYD has an oversupply issue and the Ford location in Brazil is mainly to do minor post-import fixing - which is indicative of low quality manufacturing.  But clearly, this will not be high paying jobs in Brazil.

Note that BYD is heavily subsidized by the Chinese government and that's why EVs cost so much less in China than anywhere else.

Yeah I'd like to at least try the Chinese variant for EVs at some point. Sure I have friends in China that would house me and the likes but I do not like to burden anyone with that. If we do get them here I would certainly buy one to test it out.

But renewable energy and the likes for acaoes investments are actually doing well at the current point in time. Indication that change is happening when Petrobras is still there but I think if needed they can provide the same in terms renewable energy to house the EV market. Either way next 4 years is going to put down some groundwork. Fingers crossed

@Mikeflanagan I was looking at the investments in Brazil and it appears that the real first phase is to move cars towards hybrid and eco-friendly fuels - which means that local fuel production from Petrobas et al. will still be needed.

EVs are great - but the biggest issue is the deployment of a charging network - which will be a challenge given the size of Brazil.  Realistically, until the charging network is widely deployed, EV's will stay more a daily commute / specialty item and not the long distance mass market vehicle.

oh ya i dont see this for any time in the immidiate , this is more of a time to save for xyz event lol

I think first they would need to formalize road repairs LOL then from there it could work easier

    @Mikeflanagan I was looking at the investments in Brazil and it appears that the real first phase is to move cars towards hybrid and eco-friendly fuels - which means that local fuel production from Petrobas et al. will still be needed.
EVs are great - but the biggest issue is the deployment of a charging network - which will be a challenge given the size of Brazil.  Realistically, until the charging network is widely deployed, EV's will stay more a daily commute / specialty item and not the long distance mass market vehicle.
   

    -@Pablo888

EV charging technology is mature (the first Tesla Supercharger station was built in 2012 and there are now 6,000 stations worldwide).

Tesla has 2,300 Supercharger stations in North America. How many stations would be required in Brazil?

How do electric semi’s and buses impact the charging network design?

Could Brazil switch to EVs quickly?

I highly doubt it would be a simple or easy process. Comparing population density and energy grid requirements would force an update to current systems with plenty of Brazilian bureaucracy inbetween each phase as everyone will want a payout or incentive before it gets permitted.

Might need an economic strategist to give a better response on that lol

Brazil has a vast electrical grid already. It's mostly hydro power in the south and north, with HVDC lines to Sao Paulo and Rio de Janeiro. Way ahead of the US.

Ya in the northeast it's prone to rotating power outages on the regular. That's where alot of the supply issue comes to hand lol

As I ponder this topic; "Automaker investments in Brazil - jobs and tax credits for cars," I can't escape thinking that it is a completely erroneous method to creating wealth (jobs) in Brazil. It is (as friends here like to say) a copy/paste (or Ctl-C/Ctl-V) solution that, in the end will only equip Brazil for future failure. Most likely the same driving forces are at work in Brazil as in the USA - roadbuilders and commercial trucking push for more and more roads... two lanes lead to four, then six, then eight lanes. Horizontal urbanization and instant highway-side (car-dependent) communities spread like weeds. Suddenly everybody has to measure air quality because there are days when you really don't dare to go outside and face the noxious things in the air. Nature is something you see on a screen or wear on a t-shirt.

I'm sure that I'd be labelled as a "radical" environmentalist by some, but no, I'm just a guy who remembers walking down to the local lake (like Opie on the Andy Griffith show) with a fishing poles, can of worms and bucket to bring home bluegills for mom to fry up. I was a kid that caught fireflies so that they'd glow for me at bedside in a jar. The only highways back then were brand new Interstate stretches created by Eisenhower. SMOG only happened in L.A. (at least not in Wisconsin until the 1970s). Can't eat the bluegills any more (too much atmospheric junk fell into the water) and there aren't fireflies there any more.

Yeah, sure, EVs are great and a different idea. I have friends with Jaguar and Tesla EVs. They love them. Surely the field of EVs will grow and improve BUT all one has to do is take a personal car for a ride through São Paulo, Recife and now João Pessoa to see that the infrastructure is not equipped to handle more cars, more trucks, more motorcycles - those pesky things that pass on all sides at high rates of speed.

I'm a systems management guy and the art of sysman is recognizing and implementing changes in an ordered fashion (pre-requisites, co-requisites and such) as well as understanding one's current configuration BEFORE attempting to solve problems. In other words, instead of throwing out solutions that might not resolve situations, perhaps even creating more problems, better to invest efforts into figuring out how to do things better, more intelligently....... what we expect scientists to do for us.

When I look at maps of the 1960s rail network here in the Brazilian northeast, all that remains are the corridors, and see what other nations do (probably can't include the USA in the group), I wonder why personal transport remains "king" while collective transport is really such a great option (having used a whole lot of it recently in other countries and also when I was a kid in the USA).

If Brazil invested in restoring old rail corridors (passenger and commercial) and building passenger railcars for all forms of rail (short/long distance, high-speed to VLT).... and possibly many other solutions OTHER THAN just building more cars.... it might be better served.

I think the current national administration should refocus the current focus on the automotive sector to other sectors as well.

BTW - on "clean energy," many might wrongly assume that the current growth of alternative energy sources in the northeast might not have "side effects" but there are huge social issues being caused by the new wind power and solar parks. That's yet another topic line...... For those interested, look for the Caritas (Catholic relief entity) program on wind farms (or DM me for a link).

1965 northeastern Brazil railroad map

http://vfco.brazilia.jor.br/ferrovias/m … este.shtml

1900 Wisconsin railroad map (Library of Congress)

https://www.loc.gov/resource/g4121p.ct001917/

Actual rail network in Portugal

http://81-90-53-65.addr.refertelecom.pt … _geral.png

    Ya in the northeast it's prone to rotating power outages on the regular. That's where alot of the supply issue comes to hand lol      -@Mikeflanagan

I think that investments in the EV infrastructure are very dependent on the incentives.  For example, if there is no incentive to build AND operate a charging network, this will not get done.  Also if there are not tax breaks or price rebates to buy an EV, then people will buy gas / diesel cars.  Unfortunately that's tried and true policy making.

For the early EV adopters, there are ways to make it work really well in Brazil regardless of the state of the EV infrastructure.  Solar panels can provide most if not all of the charging needs of the car but the distance range will be limited,

There will be new business opportunities to develop this charging infrastructure at individual, local, state, and federal levels.  Here is a set of skills that expats may have that Brazil may need....

Just thinking loud here....

    As I ponder this topic; "Automaker investments in Brazil - jobs and tax credits for cars," I can't escape thinking that it is a completely erroneous method to creating wealth (jobs) in Brazil. It is (as friends here like to say) a copy/paste (or Ctl-C/Ctl-V) solution that, in the end will only equip Brazil for future failure. Most likely the same driving forces are at work in Brazil as in the USA - roadbuilders and commercial trucking push for more and more roads... two lanes lead to four, then six, then eight lanes. Horizontal urbanization and instant highway-side (car-dependent) communities spread like weeds. Suddenly everybody has to measure air quality because there are days when you really don't dare to go outside and face the noxious things in the air. Nature is something you see on a screen or wear on a t-shirt.
I'm sure that I'd be labelled as a "radical" environmentalist by some, but no, I'm just a guy who remembers walking down to the local lake (like Opie on the Andy Griffith show) with a fishing poles, can of worms and bucket to bring home bluegills for mom to fry up. I was a kid that caught fireflies so that they'd glow for me at bedside in a jar. The only highways back then were brand new Interstate stretches created by Eisenhower. SMOG only happened in L.A. (at least not in Wisconsin until the 1970s). Can't eat the bluegills any more (too much atmospheric junk fell into the water) and there aren't fireflies there any more.
    -@mberigan

Nah your pretty on point, Driving up to toronto when your out of city there is an orange dome, when it rains in toronto if you wear anything white, it will be depending on the day an assortment of colors.

Smog alerts in any cities is from lack of future sight and planning to ensure quality of life which is non existent in that part of canada. Primarily due to the refineries in the south west of ontario, been dubbed chemical valley, ironically the cancer rates in ontario are some of the highest across the country.

give me good planning or leave nature alone!

   
    Ya in the northeast it's prone to rotating power outages on the regular. That's where alot of the supply issue comes to hand lol      -@Mikeflanagan
I think that investments in the EV infrastructure are very dependent on the incentives.  For example, if there is no incentive to build AND operate a charging network, this will not get done.  Also if there are not tax breaks or price rebates to buy an EV, then people will buy gas / diesel cars.  Unfortunately that's tried and true policy making.

For the early EV adopters, there are ways to make it work really well in Brazil regardless of the state of the EV infrastructure.  Solar panels can provide most if not all of the charging needs of the car but the distance range will be limited,

There will be new business opportunities to develop this charging infrastructure at individual, local, state, and federal levels.  Here is a set of skills that expats may have that Brazil may need....

Just thinking loud here....
   

    -@Pablo888

investments could only be beneficial on EV markets for recycling the old batteries or develop the technology to do that, I have faith all the smart people down here could achieve that easily.

@mberigan love the idea of mass transportation improvement.  Any ideas of how this can happen?

I love the train network in Europe - so efficient and inter-connected.  IMHO, this was developed because of space constraints (i.e. cities that cannot grow further)  over time - and the governments were willing to invest without thinking of returns.

I think that the only large country that is currently attempting to develop trains for people moving is: China - and there is significant investment by the Central Bank because building infrastructure at massive scale has been perfected there - and this creates jobs.  Not sure whether this endeavor will break even.

I agree that I would like to see the government invest more in mass transit.

Will that be harder to achieve than individuals making more local choices?

@mberigan I’d prefer more trains, too.

Alan

@Pablo888 Spain is #2 in high speed rail, with 4,000 km of HSR.

Alan

@Pablo888 Brightline seems to have a working business model for HSR in the US.

Alan

    @Pablo888 Brightline seems to have a working business model for HSR in the US.
Alan
   

    -@alan279

High speed rail?  I think that the budget for the California high speed rail project (https://hsr.ca.gov/high-speed-rail-in-california/) needed $100B for 800 miles.  $125M per mile?

If Brazil is following the path of the US, how likely is this going to be funded?

if anything, brics subsidy. We have that here unlike USA

If Brazil is following the path of the US, how likely is this going to be funded?

    -@Pablo888

Well, I was recently in northern Laos and the Chinese built a bullet train through Luang Prabang..... Not that I think that this is the model that Brazil should follow, I still think that it is what we can expect to see given the void of such influence from other countries with that kind of capacity.

.......and, it just requires vision for the Brazilian administration to read the end of big petroleum in the tea leaves if climate change projects are really [seriously] going to be considered.

wish they would take off the bandaid and go back to space race again

If Brazil is following the path of the US, how likely is this going to be funded?

    -@Pablo888

Modern Monetary Theory says it doesn't have to be funded. But that’s another discussion.

Alan

Well, I was recently in northern Laos and the Chinese built a bullet train through Luang Prabang....

Interesting funding model of the Boten–Vientiane railway!

Alan