Brazil will temporarily allow duty-free imports of electric vehicle assembly kits during the second half of 2026 as the government prepares to introduce higher import tariffs aimed at encouraging local vehicle manufacturing.
The transitional measure, approved by Brazil’s foreign trade committee Gecex-Camex, permits completely knocked down (CKD) and semi-knocked down (SKD) electric vehicle kits to enter the country without import duties from July 1 through the end of 2026, subject to a combined import value cap of approximately €463 million.
Temporary Relief Before Higher Tariffs
The measure comes ahead of a planned policy change that will raise import duties on both CKD and SKD electric vehicle kits to 35% from January 1, 2027, matching the tariff already applied to fully assembled imported electric vehicles.
Under the current rules, SKD kits already face a 35% tariff once the duty-free quota is exhausted, while CKD kits exceeding the quota remain subject to a 14% import duty until the end of 2026 before increasing to 35% in 2027.
Brazil’s government said the long-term objective is to encourage automakers to expand domestic manufacturing, increase local content, strengthen supply chains, and create jobs.
BYD Expected to Benefit
Chinese automaker BYD is expected to be among the biggest beneficiaries of the temporary exemption.
The company has been assembling vehicles since July 2025 at its former Ford manufacturing complex in Camaçari using both CKD and SKD assembly methods.
BYD has previously announced plans to begin more advanced manufacturing processes during the second half of 2026, including vehicle welding, painting, stamping, and battery assembly.
The company currently estimates annual production capacity at 150,000 vehicles, with plans to expand the facility to 300,000 units in a future phase.
GM Continues Local EV Assembly
General Motors is also expected to benefit from the policy through local assembly of the Chevrolet Captiva EV.
The vehicle is assembled from SKD kits at GM’s facility in Ceará using components imported from China. The Captiva EV is based on the Wuling Starlight S and shares much of its underlying technology with the Chinese model.
The temporary duty exemption is intended to support manufacturers already investing in local assembly while Brazil transitions toward a policy favoring full-scale domestic vehicle production beginning in 2027.