Automakers fear renewed EV tax benefits will further Chinese dominance

Brazil’s legacy carmakers are escalating their complaints about the entry of Chinese brands into the country’s fast-growing electric vehicle (EV) market, warning that a temporary tax break for kit assembly risks turning Latin America’s largest auto industry into little more than a glorified screwdriver operation.

On January 31, a six-month, zero-tariff exemption on the import of disassembled EVs under the CKD (completely knocked down) and SKD (semi-knocked down) regimes is set to expire. The waiver, approved in July 2025, allowed an additional quota of USD 463 million in imports at 0% tariffs. 

What happens next has become a flashpoint for Anfavea, the national association of automakers. Including players such as Volkswagen, General Motors, Stellantis and Toyota, Anfavea has warned the federal government that extending the exemption would distort competition during a moment of global reorganization in the auto industry, as countries vie for EV-related investments.