Federal government decision favors BYD and revolts traditional automakers

The federal government has reopened the tax exemption for the import of “kits” of electric and hybrid cars, and the decision has already provoked a reaction. Anfavea, an association that brings together automakers installed in Brazil, criticized the measure on Tuesday (23). Approved by Gecex, the executive arm of the Chamber of Foreign Trade (Camex), the rule recreates for six months, starting on July 1, a benefit that had ended in January this year.

What are electric car “kits”?

Instead of arriving ready from the factory, the car can enter the country disassembled, in parts, to be assembled here. There are two formats. In the SKD (from English “semi-disassembled”), the vehicle comes almost complete and only receives the final adjustments. In CKD (“totally disassembled”), it arrives in parts and requires a more complex assembly, closer to real manufacturing. The more stages take place in Brazil, the greater the use of labor and national auto parts.

How does the exemption quota work?

Since 2023, the government has been gradually reimposing the Import Tax on electrified cars, which previously entered without a tariff. The idea is to gradually raise the rate up to the ceiling of 35%, the limit allowed by Mercosur. The models that arrive ready have already been taxed again and reach 35% in July.

The kits gained a separate path. In July 2025, the government created a “quota”: a volume of imports — US$ 463 million — that could enter with zero tax, valid between August 2025 and January 2026. It was exactly this benefit that has just been renewed, with the same amount and a new term of six months. Above this limit, the tariff is valid again: today, 35% for SKD and 14% for CKD.

Why is Anfavea against it?

For the entity, the quota should be a temporary aid, but it has become a shortcut to fill the market with imports without the local industry actually growing. A study by Anfavea estimates that betting on large-scale kit assembly could cost R$ 96.8 billion in sales to the auto parts sector, reduce R$ 24.3 billion in federal revenue and eliminate 68 thousand direct jobs – 191 thousand in the entire chain. The association also points out that car inventories reached 150 days in May, inflated by imported ones. Sindipeças and union centrals such as CUT, Força Sindical and CTB joined the chorus against the renewal.

As a weighty argument, traditional automakers recall the R$ 140 billion they promised to invest in Brazil by 2033. They also highlight that electrified vehicles made in the country jumped from 26% of sales in the segment in 2025 to 40% in 2026.

What does BYD say?

The Chinese is the main beneficiary and defends the measure. For the brand, keeping the tax low helps to hold down the price of electric cars and accelerate the adoption of battery cars in the country. BYD invests R$ 5.5 billion in the Camaçari (BA) plant, in the former Ford unit, appointed as its largest plant outside Asia, with an initial capacity of 150 thousand vehicles per year. According to investigations, the return of the quota came from the Civil House, in response to a request from the Bahian government – and no automaker would have made the formal request.

In the short term, the quota tends to help hold down the prices of electric vehicles assembled with kits, because it reduces the tax paid by brands. The counterpoint, defended by the national industry, is that this relief postpones really local production and the creation of more qualified jobs. The dispute is not over: with the quota in force as of July, the topic should return to the next Camex meetings.