Chinese electromobility and the reconfiguration of automotive regionalism: An explanatory comparative analysis of Mercosur and USMCA

Abstract:

The automotive industry is undergoing a profound transformation driven by electrification, digitalisation, and the reorganisation of global value chains. In this context, Chinese firms have consolidated themselves as central actors, particularly in electric vehicles (EVs), batteries, and upstream segments linked to strategic inputs. While the literature has analysed these changes from perspectives focused on technological upgrading, industrial policy, or competitiveness, less attention has been paid to how Chinese-led electromobility reconfigures historically constituted forms of regional automotive integration.

This work addresses this gap from an explicitly explanatory perspective. It analyses how and through which productive and institutional mechanisms Chinese-led electromobility reconfigures automotive regionalism in Latin America. The transition towards electromobility is not conceived as a merely exogenous technological shock, but as a new phase in the evolution of automotive production regimes, in which changes in technological coordination, value capture, and governance interact with pre-existing regional integration frameworks. The central question guiding the analysis is: through which productive and institutional mechanisms does the expansion of Chinese automotive and battery firms reconfigure the regional production regimes of Mercosur and the United States–Mexico–Canada Agreement (USMCA), and why do these mechanisms operate differently across the two regions? The comparative approach allows for explaining variation in outcomes on the basis of differences in institutional architectures, policy frameworks, and degrees of regional coordination.

2. Research design and methodology
The paper adopts a comparative political economy research design, analysing Mercosur and USMCA as differentiated regimes of automotive regionalism. These are not conceived as stages along a linear trajectory of integration, but as historically specific configurations of production models, governance structures, and territorial organisation, shaped by the interaction between transnational firms and state strategies.Methodologically, the study employs a qualitative and comparative approach that combines four main sources. First, it analyses regional trade agreements, regulatory frameworks, and industrial policies that structure automotive production and investment in each region. Second, it examines the strategies of key firms -particularly Chinese automotive and battery producers such as BYD, Geely, and GWM- paying attention to their modes of regional insertion and their role in reorganising productive coordination. Third, sectoral production and trade data are used to contextualise changes in regional automotive value chains. Finally, the analysis engages with the specialised literature on global value chains, regionalisation, and production regimes.

3. Main findings
The paper presents three interrelated findings. First, it shows that Chinese-led electromobility does not dismantle existing automotive regionalism but rather reconfigures regional production regimes by transforming the mechanisms through which production is coordinated and value is captured, particularly through the growing centrality of batteries and other upstream technological segments. These changes alter the internal organisation of regional automotive systems without replacing their institutional foundations.
Second, the comparative analysis demonstrates that these mechanisms operate differently in Mercosur and USMCA. In Mercosur, Chinese investment -particularly in Brazil- has concentrated on EV assembly, battery production, and access to strategic inputs, but is embedded within a fragmented regional framework characterised by limited coordination. As a result, the reconfiguration of automotive regionalism is selective and uneven, reinforcing pre-existing asymmetries within the regional production regime. In contrast, automotive regionalism under USMCA is structured around a more coordinated and export-oriented production regime anchored in the US market. Stricter rules of origin, stronger supplier coordination, and clear industrial policy signals shape the incorporation of new technologies. Although Chinese firms face greater regulatory constraints, they continue to influence regional value chains through upstream segments and global production networks. Third, the paper shows that the transition towards electromobility intensifies pre-existing tensions in regional automotive integration, between coordination and fragmentation, market orientation and state steering, and technological upgrading and path dependency.

4. Significance and Implications

The paper contributes to debates on automotive regionalism and global value chains by demonstrating that electromobility constitutes a process of reorganisation of production regimes driven by productive and institutional mechanisms that structure the evolution of regional integration. By explaining how Chinese electromobility interacts with different regional configurations, the paper highlights the central role of institutional and governance structures in shaping the outcomes of technological transitions. From a public policy perspective, the findings underscore the importance of regional coordination and coherent industrial strategies in mediating the effects of electromobility on regional production systems. More broadly, the paper suggests that the future of automotive regionalism will depend less on the adoption of new technologies per se than on how regions manage the redistribution of control and coordination along automotive value chains.