Chapter 219 Carpooling...

"In Mexico, you can get a lot of things done with money," Jessica said with a smile.

"As long as the dealer cooperates with you, they can issue a temporary export certificate for you in Mexico, proving that the vehicle is leaving Mexico temporarily and is scheduled to return before a certain date."

"Then you drive it here in the United States. You don't sell it in the U.S.; you just drive it, while the dealer in Mexico marks the vehicle in their system as returned or as inventory in transit."

"This is a gray-area operation built on the premise that customs information between the two countries is not shared in real-time."

"It's not legal, but it hasn't been systematically investigated yet because the number of vehicles and the frequency of transactions involved aren't large enough."

"If Ramaswamy wants to scale this model and turn an occasional cross-border gray-market transaction into a continuous commercial channel, the first people to come looking for him won't be customs; it will be the money laundering investigation unit," Jessica said, shrugging.

Mu Xin leaned back against the sofa and placed his coffee cup on the table. The route through Mexico was playable at an individual level, but it couldn't be touched at a commercial level.

From the first day he bought the Water Plant in Oxford Town, he had never touched anything non-compliant. His foundation for establishing himself in the United States was that every single document could withstand scrutiny from any law enforcement agency.

"So, there are two paths: partial import of components plus local procurement and assembly is legal, while the Mexican cross-border route is just temporarily unchecked."

"The former requires time, factories, and political protection; the latter can make quick money but cannot be scaled."

Mu Xin stood up and walked to the window, looking at the snow piled up on the lake outside. A moment later, he turned around, looked at Jack, and signaled him to continue.

Jack continued flipping through his documents. "There is one more factor that might change the entire cost structure: the roll-on/roll-off ships in BYD's possession."

Mu Xin turned around.

"BYD now owns the world's largest fleet of roll-on/roll-off ships owned by an automaker, which includes several of the current largest dual-fuel car carriers in the world, such as the BYD Shenzhen, BYD Hefei, and BYD Explorer No. 1, each capable of carrying over seven thousand vehicles at a time."

"These ships are all wholly owned by BYD and are specifically used to transport vehicles produced by BYD in China to major global markets."

"The key advantage of this fleet is transportation cost. Currently, the average daily charter rate for global car carriers is around sixty to seventy thousand US dollars, and the shipping cost for a voyage from Shanghai to Mexico or the US West Coast is roughly between fifteen hundred and twenty-five hundred US dollars per vehicle."

"But with BYD using its own ships, its transportation cost per vehicle can be squeezed down to only one-third or even less of the market charter rate."

"So, for transporting cars from China to North America, BYD's landed cost is lower than any other Chinese brand."

"Then our component transportation costs will also be much lower. That's a good thing," Mu Xin said.

"True, but there is one problem," Jack said, turning to the next page of the document. "The US Maritime Administration and several senators recently proposed imposing port docking fees on all Chinese-built ships entering US ports."

"The amount is as high as one million US dollars per ton. This proposal is aimed precisely at shipowners like BYD that possess their own roll-on/roll-off fleets and whose ships are all built by Chinese shipyards."

"If this proposal takes effect, a single BYD roll-on/roll-off ship would face hundreds of millions of dollars in docking fees upon entering a US port. This cost would completely negate the advantage of BYD transporting cars in on its own."

"Currently, this proposal hasn't passed yet, but it has already gained preliminary support in the House of Representatives."

"In other words, when BYD's roll-on/roll-off ships will enter US ports, whether they can enter, and how much they will have to pay for each entry are all still undecided."

"Then what if they don't enter US ports?" Mu Xin asked. "The ships dock at Mexican ports, for example, the Port of Lázaro Cárdenas or the Port of Veracruz, and then unload the goods in Mexico, and then enter the United States by land across the border?"

"This is where the Mexico plan and the local assembly plan intersect," Jessica interjected.

"If your assembly plant is in Texas or Ohio, BYD's roll-on/roll-off ships can unload the SKD parts at a Mexican port, and then use railways and highways within Mexico to transport the kits to a bonded zone on the US-Mexico border."

"After pre-assembly in the bonded zone, they can enter the United States in the form of components. This plan can bypass the port docking fees, but a transit and pre-assembly point must be set up within Mexico."

"This transit point itself requires approval from the Mexican side, as well as a compliance framework for interfacing with US Customs data."

Mu Xin leaned against the window, mentally connecting every key node on both routes. Finished vehicle exports were blocked by tariffs, SKD badging was blocked by clauses, and the Mexican cross-border route couldn't be scaled.

"Someone has walked every path before," Mu Xin said, looking out the window. "Great Wall went with badging, Faraday Future took the trademark route, and Mexican dealers went with the gray market, but no one has taken the right components from these three paths and reassembled them into a legal finished vehicle."

"Because putting it together is too complicated," Jack said.

Mu Xin turned around. "So, the person to put it together will be me."

"BYD's core technology lies in four areas: Blade Batteries, electric drive systems, electronic control systems, and thermal management systems."

"In the short term, no one in the United States can replace these four things. Detroit's supply chain can't make Blade Batteries; Ford's batteries are all bought from LG and SK On. The suppliers aren't in the United States, and the costs are much higher than BYD's."

"It's the same for electric drive and electronic control; Tesla makes its own and doesn't sell them to others. So these four core components must be imported from BYD or other manufacturers."

"According to Jack's tariff framework, the component tariff is twenty-five percent, plus a twenty-five percent battery tariff, plus a one-hundred percent special tariff on Chinese goods."

"The cost is very high, but it must be borne because there is no alternative."

"Then there are the body stampings, interior assemblies, and chassis structural parts. These three things have zero technical content."

"Body stampings are just putting steel plates into molds and pressing them into the shapes of doors and hoods. There are dozens of stamping plants still alive around Detroit, and every one of them has excess capacity."

"Interior assemblies have a complete and mature supply chain in the United States, and chassis structural parts are also a traditional strength of Detroit."

"The shipping costs and tariffs combined for these three things from China might be more expensive than purchasing them locally in the United States. They are big, heavy, and low-value, so these three don't need to be imported; just place orders around Detroit."

Mu Xin's train of thought was very clear. According to him, the manufacturing cost of the finished vehicle could be controlled. This is assembling the car...

If you add an insanely cool and badass exterior design, it would absolutely crush the US market.