Brazil has ended a tariff concession that allowed automakers to import electric vehicles as semi-knocked-down (SKD) and completely knocked-down (CKD) kits at reduced rates, a move that will raise duties in stages to 35% by January 2027 and narrow the cost advantage for foreign manufacturers assembling vehicles locally.
The decision primarily affects Chinese automakers such as BYD, which have relied on SKD and CKD imports to supply the Brazilian market while building local operations. The preferential tariff rate of 14% on EV assembly kits had been due to expire at the end of January 2026, but Brazil’s foreign trade committee, Gecex-Camex, moved to bring forward the phase-out following a dispute with BYD.
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Under the revised framework, Brazilian media reports say tariffs on EV assembly kits will rise in stages, reaching 35% by Jan. 1, 2027. That rate will align with the duty applied to fully assembled electric vehicles, eliminating the gap that had encouraged imports of disassembled vehicles for local reassembly.
Brazil introduced a 10% tariff on fully built electric vehicles in January 2024, which increased to 25% in July 2025 and is set to reach 35% from July 1, 2026. During that period, SKD and CKD kits continued to benefit from a lower 14% rate, alongside a temporary duty-free quota worth $463 million that applied for six months.
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The government’s decision has already prompted manufacturers to accelerate localisation plans. BYD is expanding its new vehicle plant in Camaçari, in the northeastern state of Bahia, where operations initially focused on SKD assembly. The company plans to add more complex manufacturing processes, including welding, painting and stamping, in the second half of 2026, reducing reliance on imported kits and increasing local value creation.
BYD has said the plant currently has an annual capacity of 150,000 vehicles, with plans to double output to 300,000 units in a subsequent expansion phase.
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Brazil’s automotive industry body, Anfavea, which represents companies including Volkswagen, Stellantis, General Motors and Toyota, has long opposed preferential tariffs for electric vehicles and assembly kits. The group has argued that maintaining lower duties risked discouraging investment and undermining local production if the market were flooded with low-tariff imports.
The phased increase in tariffs marks a shift in Brazil’s EV policy, signalling a stronger push toward domestic manufacturing as the country seeks to balance electrification goals with industrial development.