Brazil now top importer of Chinese electric vehicles, but it won’t last

In April, Brazil overtook Belgium as the largest buyer of Chinese electric vehicles (EVs), according to data from the China Passenger Car Association (CPCA). Exports of fully electric and plug-in hybrid cars to Brazil increased 13 times compared to last year, reaching 40,163 units in April and making the country the top importer of Chinese EVs for the second consecutive month. Back in January, Brazil was only the tenth-largest market for the Asian powerhouse. A combination of factors led to this situation, starting with the gradual reinstatement of import tax on foreign EVs. 

As we reported before, incentives for these imports, which have been in force since 2015, are phasing out in Brazil. Taxes are set to return to the full rate of 35 percent by 2026 — addressing a growing concern among domestic manufacturers and also helping to finance the new Mover, the government’s program to produce safer and less polluting cars, which includes BRL 19.3 billion in tax incentives over the next five years. The tax reinstatement began in January, which explains the record number of imported electric cars sold in December last year alone: 16,279, almost triple the number recorded a year before. This incentive phase-out, however, is not happening abruptly.

Brands are still entitled to zero tax quotas in the coming semesters. In the case of pure electric cars, for example, they can bring in up to USD 283 million in vehicles by June 2024, USD 226 million by July 2025, and USD 141 million by June 2026. And this is what explains the high import numbers in recent months. “Companies will use these quotas to the fullest, as it is much cheaper to bear 1.5 percent storage costs than to pay the growing tax rates,” explains Cassio Pagliarini, a partner at Bright, a consulting firm specialized in the automotive chain.

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