The Government of Brazil has decided to extend for an additional six months the tariff reduction that permits the import of disassembled or semi-disassembled electric vehicles for local assembly. This measure has been strongly rejected by domestic automakers.
The Executive Management Committee of the Brazilian Foreign Trade Chamber (Gecex-Camex) approved an additional import quota of up to $463 million (€407 million) on Tuesday. This quota applies to completely knocked-down (CKD) and semi-knocked-down (SKD) vehicles, taking effect on July 1 for a six-month duration.
According to the Ministry of Development, Industry, Commerce, and Services, the measure maintains the gradual phase-in schedule for electric vehicle import tariffs requested by domestic automakers. It aims to contribute to fleet modernization, innovation, and decarbonization within the automotive sector.
The government explained that once the allocated quota is fully exhausted, the standard baseline tariffs currently in force will apply: 35% for semi-disassembled (SKD) vehicles and 14% for completely disassembled (CKD) units. Additionally, officials reiterated that fully assembled imported cars will not be subject to any quotas.
Read more: Brazil: social media giants to adopt illegal content rules
The tax exemption particularly benefits automakers that are currently launching local production facilities for electric vehicles in Brazil, such as the Chinese manufacturer BYD. The company, which inaugurated a manufacturing plant in the state of Bahia, had argued for maintaining the benefit during the transition period to foster a more integrated local production ecosystem.
BYD has already captured a significant slice of the Brazilian automotive market with its imported, disassembled, and semi-disassembled electric models, cutting into the market share of established domestic automakers.
The reaction from the broader Brazilian auto industry was immediate, with domestic manufacturers threatening to pursue legal action against the decision. The National Association of Motor Vehicle Manufacturers (Anfavea) stated that the measure runs “counter to the interests of workers, national vehicle manufacturers, and Brazilian auto parts companies,” while questioning why the decision was finalized without consulting the sector.
The association maintained that the measure abruptly modifies a policy previously negotiated with the government, generating uncertainty for companies that had planned future investments under the assumption that these specific quotas would expire at the end of June.
Read more: Brazilian detained at Hong Kong airport with €210,000 worth of cocaine. What the investigation reveals about South American routes
Anfavea highlighted that automakers have collectively announced investments totaling 140 billion reais (€23.7 billion) through 2033 to expand local manufacturing footprints, develop new propulsion technologies, and strengthen the regional supply chain.
According to the organization, the primary challenge facing the market today is no longer just stimulating the adoption of electric vehicles, but rather ensuring that the energy transition actively generates production, employment, engineering, and added value inside Brazil.
