Anfavea may go to court if Brazil revives tariff-free import quotas for EV kits

Automakers association Anfavea is considering the possibility of taking legal action if the government in Brazil approves the return of tariff-free import quotas for electrified vehicle (EV) kits. The move marks an escalation in the dispute between automakers with manufacturing operations in Brazil and Chinese carmaker BYD, which is seeking to reverse a decision taken by the government.

The issue is expected to be discussed at the 238th ordinary meeting of Gecex, the executive committee of Brazil’s Foreign Trade Chamber, on Tuesday (23).

BYD has been pressing the presidential palace to reinstate the quotas, which expired in January, and to postpone tariffs scheduled to take effect in July. The company had already been granted a six-month period to import under a zero-tariff regime.

“The possible return of the benefit for imported electric vehicles would discourage the new industrialization process defended by the government itself and put at risk the creation and preservation of thousands of jobs in Brazil,” said Igor Calvet, president of Anfavea.

According to the association, the government did not hold the required prior debate with the productive sector and did not give proper public notice of the preparatory acts for the Gecex deliberation. Gecex is the body responsible for final decisions on tariffs and import quotas.

In a letter sent on Monday (22) to Márcio Elias Rosa, minister of Development, Industry, Trade and Services, Fiesp President Paulo Skaf asked that the matter be removed from the Gecex agenda.

In the document, Skaf said he received the information “with surprise,” since previous Gecex decisions had established that the import quotas would end on Jan. 31, 2026, and that all tariffs on electrified vehicles, whether fully assembled or not, would be gradually restored to 35% by January 2027.

Fiesp, the São Paulo industry federation, argues that the issue should be withdrawn from the agenda in the name of regulatory predictability and the preservation of investments made by Brazilian industry. The federation says more time is needed for a broad and well-grounded discussion with all interested parties.

What is at stake

Figures compiled by Anfavea show the scale of the potential impact of a concession to BYD. According to the association, large-scale production using imported EV kits could reduce purchases of auto parts in Brazil by R$103 billion and cut ICMS and PIS/Cofins tax revenue by R$26 billion, for a total impact of R$129 billion across the supplier chain and tax collection.

Anfavea says this would be the cost to Brazil of sustaining the Chinese automaker’s business model.

In employment terms, the study projects the loss of 69,000 direct jobs and 227,000 supplier jobs, along with an additional R$42 billion impact on light-vehicle exports.

The tariff schedule Anfavea wants to preserve was established in November 2023, when Gecex approved a gradual restoration of import duties on electric vehicles to 35%. In July 2025, the committee brought forward part of the schedule for disassembled kits and created zero-tariff quotas for CKD and SKD vehicles. The quotas were in force from August to December 2025.

CKD, or completely knocked down, refers to vehicles imported as parts for local assembly. SKD, or semi-knocked down, refers to partially assembled kits.

In July 2026, the 35% tariff is scheduled to return for fully assembled vehicles and SKD units. In January 2027, the same rate will apply to CKD kits.

Electrification advances without more exemptions, Anfavea says

Anfavea argues that the rules already in place are working and that Brazil’s electrified vehicle market is growing without the need to maintain tariff-free imports.

Electrified vehicles produced in Brazil accounted for 15.3% of segment sales in 2024, 25.7% in 2025 and 40% from January through May 2026. In May alone, registrations reached record levels, with 21,000 electric vehicles, 15,800 plug-in hybrids and 14,900 hybrids sold.

For the association, the figures show that the market can grow without relying on exempt imports.

While BYD seeks more time to import vehicles tariff-free despite already having a factory in Camaçari, Bahia, and receiving ICMS incentives from the state government, automakers affiliated with Anfavea have announced new investments in local production without asking the government for quotas.

Stellantis confirmed plans to produce Leapmotor electric vehicles in Pernambuco. Volkswagen said all new vehicles will have electrified versions. GM already produces two electric models in Ceará and will manufacture a third by the end of the year. Toyota announced national assembly of batteries for hybrids. Renault-Geely will begin producing Geely electric vehicles in Paraná later this year. Caoa expanded its partnership with Changan in Goiás. HPE will receive investments to produce GAC electrified vehicles in Catalão, also in Goiás.

“Changing the rules in the final stage of implementation undermines the confidence of those who invested based on them. More than production volumes, what is at stake is Brazil’s ability to preserve investment, expand competitiveness and consolidate itself as a hub for engineering, innovation and the development of new mobility,” the association said.

Source: Times Brasil

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