Electric Mobility without Industrial Upgrading: Chinese EV Expansion and the Peripheral Value Chain Integration in Brazil

Keywords:

Abstract:

The global transition toward electric mobility is reshaping the technological and industrial foundations of the automotive industry. Electrification is not only transforming propulsion technologies but also reorganising global automotive value chains and altering the geographical distribution of production, innovation and technological capabilities. Within this context, the rapid internationalisation of Chinese electric vehicle (EV) manufacturers has emerged as one of the most significant developments in the contemporary automotive sector (IEA, 2025). Chinese firms have expanded aggressively into international markets through large-scale production capacity, vertically integrated supply chains and strong state-supported industrial policies, reshaping global automotive competition and production systems (Freyssenet, 2009; Pardi, 2021; Sturgeon & Van Biesebroeck, 2011).
Brazil represents a particularly relevant case within this transformation. As the largest automotive market in Latin America and historically one of the main manufacturing hubs in the Global South, Brazil developed a relatively dense automotive supplier base supported by industrial policies aimed at local content requirements, technology transfer and supplier development (Boyer & Freyssenet, 2002). However, the transition toward electric mobility is unfolding under new technological and geopolitical conditions that may reshape the country’s position within global automotive production networks.
In 2025, Brazil registered 223,912 electrified light vehicles, representing a 26% increase compared to 2024 (ABVE, 2026). During the same period, the overall automotive market expanded by only 2.6%, indicating that electrified vehicles are growing much faster than the total automotive market (ANFAVEA, 2025; FENABRAVE, 2025). Electrified vehicles accounted for approximately 9% of total light vehicle sales in 2025 and reached 13% in December, the highest monthly share recorded in the Brazilian market (ABVE, 2026). The technological composition of this market is dominated by plug-in vehicles: plug-in hybrid electric vehicles (PHEV) represented 45% of electrified vehicle sales, while battery electric vehicles (BEV) accounted for 36%.
The competitive structure of the Brazilian EV market has also been rapidly transformed by the entry of Chinese manufacturers. Market data indicate that BYD alone accounts for approximately 38.6% of electrified vehicle sales, followed by Great Wall Motors (GWM). The expansion of Chinese firms reflects broader structural changes in the global automotive industry, in which technological capabilities related to batteries, electric powertrains and advanced materials have become central to value creation within global production networks.
Against this background, this paper addresses the following research question: to what extent does the expansion of Chinese electric vehicle manufacturers in Brazil foster domestic industrial upgrading, or instead reinforce patterns of peripheral integration within global automotive value chains? The study investigates whether the rapid diffusion of Chinese-led EVs contributes to domestic technological capability development or reinforces a pattern in which local firms remain concentrated in externally controlled, lower value-added activities. In the global value chain literature, this configuration is often described as peripheral integration, in which countries participate in production and market growth but experience limited functional upgrading, weak capability accumulation and restricted local value capture (Humphrey & Schmitz, 2002; Pavlínek, 2018; Yeung, 2016).
The study adopts a qualitative case-study approach based on secondary data analysis and literature review. The analytical framework draws on the literature on Global Value Chains (Gereffi et al., 2005; Sturgeon & Van Biesebroeck, 2011) and on research on the restructuring of the global automotive industry developed within the GERPISA research network (Boyer & Freyssenet, 2002; Freyssenet, 2009; Pardi, 2021). Empirically, the analysis combines market data on the diffusion of electrified vehicles in Brazil, examination of the Brazilian automotive value chain under electrification, and analysis of the evolving policy framework shaping the transition toward low-carbon mobility.
Preliminary findings suggest that Chinese manufacturers are playing a decisive role in accelerating the diffusion of electric mobility in Brazil. Competitive pricing strategies, vertically integrated supply chains and the rapid expansion of product portfolios have enabled these firms to capture a substantial share of the electrified vehicle market within a short period. However, the rapid diffusion of electrified vehicles does not necessarily translate into domestic industrial upgrading. Evidence indicates that Brazil’s current position within the emerging EV value chain remains largely peripheral, particularly in the light vehicle segment.
Most electrified vehicles commercialised in Brazil are imported or assembled locally through CKD and SKD production models that rely heavily on globally integrated component packages. Although recent investments by Chinese manufacturers—including BYD’s industrial complex in Camaçari (Bahia) and GWM’s factory in Iracemápolis (São Paulo)—signal the beginning of local manufacturing activities, these operations remain primarily focused on vehicle assembly rather than on the development of advanced technological capabilities.
The most technologically sophisticated segments of the EV value chain remain largely external to the Brazilian production system. This pattern is particularly evident in the battery sector. While battery modules and packs may eventually be assembled locally, lithium-ion battery cells—the most technologically complex and value-intensive component of EV batteries—are entirely imported. As a result, the segments responsible for the highest value capture remain concentrated in countries that dominate battery technology and advanced materials processing.
This dynamic contrasts with the historical trajectory of the Brazilian automotive industry, which developed a relatively dense domestic supplier base and local engineering capabilities through industrial policies aimed at component localisation and technological adaptation (Boyer & Freyssenet, 2002). Brazil’s long-standing experience with biofuels—particularly through the Proálcool program and the diffusion of ethanol and flex-fuel technologies—stimulated domestic R&D and supported the development of a locally embedded innovation ecosystem.
Consequently, the electrification process may be producing a form of peripheral integration into the global EV value chain, in which Brazil functions primarily as a consumer market and assembly location rather than as a hub of technological development or component manufacturing. This finding contributes to the literature on global value chains by illustrating how technological transitions in emerging economies may occur without a corresponding process of domestic industrial upgrading (Gereffi et al., 2005; Sturgeon & Van Biesebroeck, 2011).
From a policy perspective, the results suggest that the diffusion of electric vehicles alone is insufficient to guarantee industrial upgrading. Brazil’s main automotive policy instrument, the Mover Programme (Law No. 14,902/2024), links fiscal incentives to decarbonisation and energy efficiency targets but does not directly address the industrialisation of the EV value chain. Without complementary policies aimed at developing domestic capabilities in higher value-added segments—such as battery manufacturing and advanced power electronics—the transition toward electric mobility risks reinforcing technological dependence within global automotive value chains.

Key words: Electric vehicle transition; Global automotive value chains; Chinese automotive expansion; Industrial policy; Automotive industry restructuring; Brazil.

Acknowledgements: The authors gratefully acknowledge the financial support provided by the Fundação de Amparo à Pesquisa do Estado de Goiás (FAPEG) and the administrative and institutional support of the Fundação de Apoio à Pesquisa (FUNAPE), whose contributions made the development of this article possible.

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