Chinese automakers, led by BYD and Great Wall Motor (GWM), are aggressively expanding production and sales in Brazil, sparking concerns from traditional automakers about unfair competition and raising alarms among experts about potential data security risks and surveillance by Beijing.
On July 1, BYD started production at its factory in Bahia, where it plans to produce up to 300,000 cars annually, while GWM, having purchased a Mercedes-Benz plant in Iracemápolis, São Paulo, expects to begin production later this year. GWM’s strong market entry is evident: A cargo ship carrying 900 GWM vehicles docked in Vitória in mid-April, and its Haval H6 model outsold established competitors in the first quarter of the year.
This surge has led to accusations of dumping from Brazil’s National Association of Motor Vehicle Manufacturers (Anfavea), which represents the majority of top-selling automakers. Anfavea claims Chinese imports are benefiting from significantly lower taxes, creating a “dangerous distortion” in the market. In 2024, Brazil imported 466,505 cars, a 33 percent increase from 2023, with most electric vehicles coming from abroad. The national auto industry is urging the government to immediately restore a 35 percent import tax for hybrid and electric vehicles, currently scheduled for mid-2026.
“Anfavea has hired a specialized firm to assess the feasibility of filing an anti-dumping lawsuit against one or more Chinese importers,” Anfavea said in a statement to Diálogo.
Anfavea President Igor Calvet noted a 5.9 percent drop in domestic production compared to April, signaling a loss of sales share to imports. Chinese-origin vehicles accounted for 58,118 units from January to May, a 35.9 percent increase over the same period in 2024, driving 54 percent of overall sales growth.
“In the case of models coming from China, we have seen an atypical influx benefiting from much lower taxes than we see in other producing countries, which creates a dangerous distortion in our market,” Calvet said.
Beyond economic impact, information security experts warn of a new era of privacy risks, especially with connected electric vehicles. This data collection capability raises significant red flags for national security, given the Chinese Communist Party’s known ability and willingness to leverage information from private companies for intelligence and surveillance purposes. Thiago Guedes, CEO of Deserv, an information security and data privacy company, emphasized the potential for extensive data collection.
“Electric and connected vehicles operate as true data collection devices on drivers’ habits: real-time geolocation, routes traveled, voice, image, driving profiles, biometric data, and even integration with smartphones,” Guedes told Diálogo. “The danger increases when this data is processed by cloud systems hosted outside the country or controlled by foreign companies with low transparency regarding security practices.”
Brazil’s General Data Protection Law (LGPD) sets strict rules for data processing and international transfer. Guedes noted that processing sensitive data without legal justification could violate the LGPD. However, he stressed the law’s effectiveness relies on active enforcement and cooperation among technical and regulatory bodies.
Guedes advocates for Brazil to “adopt strict technical approval criteria, requiring cybersecurity audits, transparency in data flows, server location, and contracts with robust data protection clauses.” He believes a framework based on “technological compliance and privacy by design enables innovation with security, without relying on protectionist measures.”
While Brazil’s Civil Rights Framework for the Internet, a comprehensive law that establishes rights and responsibilities for internet users, offers some subsidiary coverage, a clear sectoral regulatory framework defining minimum standards for automotive cybersecurity, interoperability, and mandatory international certifications remains necessary, Guedes said.
The rapid expansion of Chinese automakers in Brazil presents a dual challenge: Safeguarding the domestic industry from alleged unfair competition while urgently developing robust regulations to protect sensitive consumer data from potential foreign surveillance. Brazilian officials face the complex task of balancing economic growth with national security in the burgeoning electric vehicle market.
