Beijing is delaying approval for carmaker BYD to build a plant in Mexico amid concerns that the smart car technology developed by China's biggest electric vehicle maker could leak across the border to the US, the Financial Times reported.

The commerce ministry has not yet given approval for the project, which BYD first announced in 2023 alongside plans for plants in Brazil, Hungary and Indonesia. The proposed Mexican facility would create 10,000 jobs and produce 150,000 vehicles annually.

"The commerce ministry's biggest concern is Mexico's proximity to the US," said a source familiar with the matter. Authorities fear Mexico would gain unrestricted access to BYD's advanced technology, potentially allowing US access to it.

Shifting geopolitics have also contributed to Mexico cooling on the project. The country has sought to maintain relations with US President Donald Trump, who has imposed tariffs on cross-border trade. Trump's team has accused Mexico of being a "backdoor" for Chinese goods to enter the US duty-free.

In November, Mexico's President Claudia Sheinbaum said there was still no "firm" investment proposal from any Chinese company, despite BYD reaffirming its intent to invest $1bn earlier that month.

Stella Li, executive vice-president at BYD, told the FT the company had "not decided [on] the Mexico facility yet". The firm sold more than 40,000 vehicles in Mexico last year and aims to double sales volume and open 30 new dealerships in the country in 2025.

The carmaker sold 4.3mn electric vehicles and hybrids globally in 2024 and recently raised $5.6bn in a Hong Kong share sale to fuel its overseas expansion.

The factory, when completed, will join BYD’s other global plants in Brazil, Hungary, Turkey, and Thailand. Amidst a surge in investment from both Chinese and Western automakers, including Tesla, Mexico remains a highly attractive site for production due to its proximity to the US and its role within the North American free trade agreement.