BYD delays plans for its LFP cathode plant in Chile amid geopolitical tension

News Analysis




BYD delays plans for its LFP cathode plant in Chile amid geopolitical tension

In 2023, BYD announced plans for a 50ktpy LFP cathode active material (CM) facility in Antofogasta in northern Chile. The project, which commanded an investment of $290M and was due to come online in 2025, has now been postponed until further notice amid uncertainty for its future.

BYD, the world's second-largest producer of BEVs, initially introduced the project due to ramping demand for low-cost CAM and EVs in the Americas. Being in close proximity to the Atacama’s rich lithium reserves was therefore a sensible choice for a CAM facility that would use lithium carbonate as the feedstock for midstream production. This major delay in plans perhaps spells greater uncertainty for the Chinese major OEM within the region, although it is difficult to determine whether plans will just be delayed, scaled back or scrapped entirely. BYD’s Chief of Americas Stella Li said she was uncertain as to when the company would resume the project, stating that there is “a lot of uncertainty” moving forward.

Sales of BYD’s low-price EVs have performed well in South America, taking advantage of lower production costs due to more vertical and streamlined operations than many other automakers. The proposed CAM facility would therefore have been a major investment for BYD outside China to compliment its lithium and iron phosphate processing facility in Brazil. The automaker still appears to remain committed to the region, but its strategy may have changed in light of the ever-evolving battery and geopolitical landscape.

It is uncertain whether BYD had plans to scale up operations in South America to later test the water with the US market, but the Biden Administration’s recent 25% to 100% tariff hike on Chinese EVs has no doubt all but closed that door. Production of EVs in South America would be a potential FTA route into the US market for BYD, however, the US government continues to tighten control against imports from China and Chinese companies and is, therefore, a route that brings greater risk. Although delaying the project in Chile will have been considered by BYD for some time before the tariff announcement, perhaps its priorities and vision has shifted in response to rising geopolitical tension between the US and China.