The cargo ship that extends over 20 football fields on the cover space that was moored in the Itajai port of Brazil at the end of May, with more than 7,000 Chinese electric vehicles intended for enthusiastic buyers. Nevertheless, this impressive view masks a brewing industrial storm that offers Delhi policy makers a crystal clear preview of what happens when Chinese EV giants such as BYD get unlimited market access. Brazil's experience serves as a warning story that explains why the government remains steadfast in blocking Chinese car manufacturers to enjoy easy access through its new electric vehicle policy.
The figures from Brazil paint a grim image of Chinese dominance. BYD alone conquered 90% of the Brazilian market for electric vehicles by April 2025 and sold more than 76,700 vehicles in 2024, which marked a stunning increase of 328% compared to the previous year. The import of the Chinese electric car increased to 85% of the EV turnover of Brazil in 2024, an increase of approximately 60% in 2023. This rapid acquisition brought Brazilian officials of the car industry and employer that the intake would eliminate inland production and eliminate jobs.
The restrictive attitude of the government towards Chinese EV -makers stems from press note 3 of 2020, whereby every entity of countries shares country borders with the nation to request the government's approval for investments. This policy, introduced during the COVID-19 Pandemie, focuses specifically on opportunistic acquisitions during economic vulnerability.
Despite the presentation of an investment proposal of $ 1 billion in the production of electric cars and batteries, BYD has no access to the concessional 15% import obligation of the new EV policy because it cannot offer the required foreign direct investment commitment via automatic approval routes.
The strict policy requirements include a minimal investment of RS 4,150 Crore ($ 500 million), the establishment of production facilities within three years and reaching 50% domestic value addition within five years. Although these conditions seem hospitable to global players such as Tesla, they effectively exclude Chinese companies that should navigate through the government's approval route, where applications are confronted with detailed control and indefinite delays.
Brazil's experience shows exactly what Delhi is trying to avoid. The South American nation has initially exempt from an import load of 35% to encourage adoption, creating an open gateway for Chinese manufacturers. When the Brazilian policymakers realized their mistake, they restored the rates from 10% in January 2024, gradually rising to 35% against mid -2026. This reactive approach was too late.
Chinese car manufacturers have flooded the ports of Brazil with more than 70,000 unsold vehicles, anticipating the tariff increases. BYD has used a growing fleet of cargo ships to accelerate overseas expansion, with Brazil becoming his top objective outside of China. The largest car-bearing ship in the world completed its first trip specifically to deliver Chinese EVs to Brazilian ports.
Brazilian domestic manufacturers, including subsidiaries from Volkswagen, General Motors and Toyota, suddenly noticed cheap vehicles against artificially. Industrial groups started lobbying the government to speed up the planned tariff increases, with the argument that Chinese companies are involved in dumping product by selling vehicles at underlying prices.
The approach to the government reflects a broader strategy to protect and cherish domestic production possibilities. Tata Motors, who offers all the Tigor EV and Nexon EV, explicitly asked for equal treatment under the FAME II scheme, and emphasizes the importance of localization and affordable EVs. The company's position emphasizes that the preferred treatment for import manufacturers could undermine that have invested in local production.
Recent developments show that the government can relieve some EV -localization rules because of the rare export of China, but this reflects the pragmatism of the supply chain instead of policy that is all about Chinese companies. Civil servants have indicated that they can accelerate Chinese applications in specific sectors where the nation does not lack alternatives, in particular in battery technology, but the production of automotive is not in these priority areas.
The cautious approach of the government is in line with worldwide trends. The United States maintains a rate of 27.5% on Chinese cars and have increased tasks on Chinese electric vehicles to 100%. The European Union imposed rates of a maximum of 35% of Chinese EVs, which recognizes the threat of market dominance. Even Canada has implemented similar measures, giving Brazil one of the few large markets that is initially accessible to Chinese manufacturers.
The global EV Domanes of China cannot be denied and records 76% of the global market share in October 2024. Chinese brands only sold more than 130,000 electric vehicles abroad in the third quarter, which represents a four -fold increase compared to 2022. This expansion strategy focuses on emerging markets where established players have been slower to develop the supply of electric vehicles.
The struggle of Brazil illustrates that as soon as Chinese manufacturers have established market dominance by aggressive prices and government subsidies, reversing that control becomes extremely difficult. The more than 70,000 unsold Chinese vehicles that hide Brazilian ports serve as a tangible memory of the effects of unlimited market access.
For policymakers in Delhi, the experience of Brazil offers the perfect justification for maintaining strict barriers against Chinese EV -makers, while investments are welcomed by companies that are willing to bind to substantial local production and technology transfer.
Via investing