BRICS Summer School

Fudan University

The automotive electrical sector between Brazil and

China's policies and the BRICS Industrial Agenda.

Melissa Lira de Souza.

Melissa Lira de Souza is a Brazilian master's student in Public

Administration at the Institute of Human and Social Sciences of the
Fluminense Federal University (UFF) and also an undergraduate Law
student at the same university. She already holds a bachelor degree in
Public Administration and a specialization in Project Management from
the University of São Paulo (USP). She is currently a member of the
Center of Comparative Law and Brazil-China Relations at UFF and the
Asian Studies Group at the Federal University of Minas Gerais
(UFMG).

Abstract
Due to its rise in the 21st century and its growing geopolitical importance, China has a
constant presence in our daily lives, making it increasingly difficult to deny its academic
significance. In this regard, Chinese studies have seen a significant increase in interest in recent
years, with politics and industry serving as useful tools for analyzing the processes that have
shaped the country and its development. This work aims to contribute to a deeper understanding
of the experience of the electric vehicle industry in Brazil, establishing a comparison with the
policies of Brazil and China, in order to capture the perspectives and barriers of this growing
niche in the BRICS and globally. The research will be conducted using news and already
published academic papers.

I. Introduction
 In 1992, during the United Nations Conference on Environment, a global agenda was
consolidated that prioritizes environmental issues and sustainable development as a means of
social and economic development and growth. In this context, climate issues were placed as a
priority, establishing global measures for environmental protection. By 2015, COP27, the 27th
Conference of the Parties, was held with the aim of addressing global climate actions and
highlighting the need for greater mobilization for the transition of the energy sector, creation
of alternative fuels, and reduction of fossil fuels. (BISPO, CACHIN, 2023)
In recent decades, there has been a growing debate on the importance of sustainability and
the conscious use of natural resources. Aware of this need, various organizations such as
BRICS and the UN have been establishing agreements to promote a shift in the current global
paradigm. Brazil has been taking measures and gaining international prominence by advocating
and pressuring Northern countries for changes and greater positioning. One example of
sustainable policies implemented by the Brazilian government is the Pro-álcool program,
where Brazil was a pioneer in the bioenergy sector from sugarcane, investing in the production
of ethanol as a biofuel for motor vehicles. (SANTOS, 2022)
Despite Brazil's leadership in promoting this new technology, it has not transcended
national borders. Emerging on the horizon as a solution to this problem is the technology of
electric vehicles, which would be a clean and sustainable transportation option. (SANTOS,
2022)
In this regard, the electric vehicle industry in Brazil has shown significant growth,
especially during the administrations of Luiz Inácio Lula da Silva and Dilma Rousseff. Among
the industrial policies aimed at promoting the electric sector and modernizing the Brazilian
industrial sector are Inovar-Auto, which ended in 2017, and more recently Rota 2030 and the
Mover program.

II. Brazilian industrial policy

The Rota 2030 - Mobility and Logistics program, created by Decree 9,557, aims to
establish standards to increase the safety and competitiveness of the Brazilian automotive
sector, prioritizing the reduction of greenhouse gases and promoting environmental
sustainability and citizenship. According to a report published by the Ministry of Development,
Industry, Commerce, and Services in December 2023, the program is part of the federal
government’s strategy to develop the country's automotive sector from a modernizing
perspective by investing in research and development of new technologies at the national level
and providing a special tax regime for the import of auto parts without equivalent national
production.
According to the report, Rota 2030 emerged in a context where the automotive industry
is signaling profound transformations in its production and use. These new trends create new
opportunities for Brazil to integrate into the global automotive supply chain via vehicle and
auto parts exports, promoting a leapfrogging opportunity.
The program also aims to address difficulties faced by the national automotive industry,
such as low competitiveness, passive integration into global chains, technological lag,
particularly in energy efficiency and structural performance, risk of losing investments in the
country, and the transfer of research and development activities to other locations,
consequently leading to a loss of high-skilled jobs and contributing to the re-primarization and
deindustrialization of this segment in the country. (MDIC, 2023)
The formulation of policies such as Rota 2030, and more recently the Mover (Green
Mobility) program, which expands sustainability and decarbonization requirements for the
automotive fleet and stimulates investment in mobility and logistics, is justified by the need to
increase the competitiveness of the national industry, not only by reducing costs but also
through technological differentiation.
According to a publication from Planalto (2024), Mover, for example, provides for R$19.3
billion in financial credits between 2024 and 2028, which can be used by companies to offset
federal taxes in return for investments made in research and development and new production
projects in the country. The Mover Program aims to achieve the "decarbonization" of the
automotive industry across various sectors, with the goal of accounting for carbon emission
reductions throughout the entire production process. The incentive for registered companies
ranges from R$ 0.50 to R$ 3.20 for each real invested in research, development, and
technological production aimed at decarbonizing the fleet of cars, buses, and trucks in Brazil.
The goal, according to the Brazilian Planalto’s announcement, is to reduce carbon emissions
by 50% in the country. The measure implemented by the Lula government demonstrates the
Brazilian government's efforts to modernize the Brazilian industrial sector in line with
agreements made with BRICS.
It is important to note that the development of the Brazilian automotive industry is
traditionally linked to large automakers and global companies from Northern countries such as
the United States, Germany, and Japan, which have their headquarters and decision-making
centers outside the country and insist on using fossil fuels despite their severe environmental
impact.
 "...investment in technological development and innovation is key to the survival of
companies in the global market..." (MDIC, 2023)
As a result of these new measures, we can mention the arrival of new Chinese automakers
to the national market, such as the BYD electric vehicle factory in Camaçari, Bahia, occupying
the former FORD factory in Brazil. This market shift has left the more traditional sectors of the
Brazilian automotive industry anxious. In a report to Globo newspaper in September 2023,
Márcio de Lima Leite, president of the National Association of Motor Vehicle Manufacturers
(ANFAVEA), advocated for the return of import taxes to 35%, as well as a quota for imported
electric vehicles.
The Anfavea association claims that this move is an "invasion" and represents a "threat"
to the Brazilian automotive industry. However, it did not disclose updates on plans to
modernize the production base or how to bring more modern products to the already established
factories of its associates, nor did it discuss the subsidies and exemptions received by
American, Japanese, and German industries traditionally established in the country. (GLOBO,
2023)
Although the formulation of these public policies represents a significant advancement
for Brazil, more ambitious goals are needed to elevate the level of production in the country.
The Chinese government, for example, has set an ambitious goal for its electric vehicle sector.
The country has developed a strategy of subsidies and substantial investments to achieve
leadership in mass production of electric vehicles, an experience that Brazil and other BRICS
countries should strive to cooperate with and learn from.
Although the Brazilian automotive industry has been subject to intense protectionism for
decades, a strategic shift is observed in the new Lula government through the analysis of the
new Rota 2030 and the new public policy measures and actions implemented by the new
administration. It is believed that this change in the Brazilian government’s stance may signal
a greater convergence with the goals and objectives proposed within BRICS.

III. BRICS and the industrial agenda

In terms of BRICS, collaboration in industrial policy began in 2015 in Moscow, Russia,
when cooperation was institutionalized through the Industry Ministers' Meeting. Various
actions were proposed, such as training programs and skill development, as well as research
development and business opportunities in industry. However, much still needs to be done.
(Industry Ministers, 2015)
 Criticism and sanctions against the Chinese electric vehicle industry, for example, reveal
the need for a common BRICS agenda that prioritizes cooperation in knowledge dissemination
and accumulated learning, and addresses concerns of several countries regarding the
deindustrialization of their production bases. Thus, integrating BRICS in terms of trade and
investments in the industrial sector, especially automotive and electric vehicles, is an essential
tool for the bloc's integration.
According to Henry Kissinger (2011) in his book "On China," the Chinese strategic
tradition, unlike the Western one, aims to accumulate relative advantages over competitors
while avoiding direct confrontations. Thus, establishing a relationship of trust and minimizing
distrust from other countries will be a fundamental strategy for China and BRICS in the coming
years.
According to Blackwill and Harris (2016), Chinese investments in various countries have
consolidated as a strong diplomatic strategy to help the country achieve its strategic goals and
exert influence. In this aspect, the arrival of companies like BYD, GWM, Jaecoo, Tank, and
others in Brazil can positively signal the country in terms of local development, job creation,
structural changes, and capacity accumulation.
Thus, establishing long-term joint industrial policies will be an essential effort to bring
BRICS countries closer together, as well as to help each country individually overcome its
development challenges by promoting a common industrial development agenda capable of
enhancing BRICS' participation in the Fourth Industrial Revolution and overcoming challenges
of heterogeneous industrial performances. (SANTIAGO, 2020)

IV. Conclusion
For the electric vehicle industry in the country to gain market space, it will have to
compete with the large combustion vehicle manufacturers already established. Santos (2022)
states that this paradigm shift will result in significant losses for conglomerates and brands
specializing in combustion vehicles. This movement will create new possibilities for leadership
and innovation for new global players. It is expected that BRICS countries can take the lead in
this new movement by leveraging the competitive advantages of being the first countries to
invest heavily in this segment.
Moreover, fostering technological development projects, investing in job creation,
improving the investment and business environment, building industrial infrastructure,
capabilities, and policy coordination among the countries will be fundamental to promoting
sustainable economic growth and a common long-term industrial agenda for Brazil, China, and
other BRICS countries.

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