Brazil Automotive Green Mobility Investment
Recent industrial policy changes made by the current Brazilian government have spurred vehicle manufacturers active in Brazil to announce new investments in modernizing manufacturing facilities and research & development capabilities to improve sustainability and move toward production of electric and hybrid vehicles. Overall, a record US$ 22 billion in investments have been announced in the sector this year with investment occurring through 2032, according to the Brazilian Association of Vehicle Manufacturers (Anfavea).
The largest investment was announced by Stellantis with US$ 5 billion targeted to expand their operations in Brazil and to increase research efforts to determine how to best develop hybrid vehicle models that use biofuels such as ethanol and biomethane. Other original equipment manufacturers (OEMs) that announced investments this year include General Motors, Volkswagen, Toyota, Mitsubishi, Hyundai, Renault, Nissan, CAOA, BYD, and Great Wall Motors. The Brazilian Association of the Auto Parts Industry (Sindipecas) increased its forecast of investments in the industry from two percent to five percent, equivalent to US$ 1.25 billion for 2024.
These investment announcements are primarily due to the Brazilian federal government’s new program for Green Mobility and Innovation called Mover, and expansion of other existing policies that define rules for decarbonization and sustainability in the automotive sector and create regulations and fiscal incentives for the development of new energy efficiency technologies in mobility and logistics. The program includes an average of US$ 800 million in incentives for companies that invest in decarbonization operations between 2024 and 2028 and aims to reach more than US$ 2 billion in tax credits by its end. In March 2024, the government defined the first rules for these incentives that companies will be able to use in tax abatement for research, development, and production investments.
The government program and subsequent investment announcements will have a huge impact on the Brazilian automotive industry, including auto parts and vehicle manufacturing. At the same time, as local companies develop their capacities, there will be opportunities for U.S. companies to supply technologies, equipment, and parts that can be used in these new industry operations or to complement what will be developed in Brazil.
If you wish to learn more about these opportunities or want to be counseled about the Brazilian automotive industry, contact Commercial Specialist Thales Demarchi at thales.demarchi@trade.gov.