Brazil Zero-Tariff EV Kits Quota Renewed to Support Local Assembly

Brazil is extending incentives for the domestic assembly of electrified vehicles through a renewed import measure that grants additional duty-free quotas for imported CKD and SKD electric and hybrid vehicle kits. Approved by the Executive Management Committee of Brazil's Foreign Trade Chamber (Gecex-Camex) on June 23, the new policy becomes effective on July 1, 2026. The Brazil Zero-Tariff EV Kits Quota replaces the previous incentive that expired on January 31, 2026, while maintaining the government's broader strategy of encouraging industrial development, fleet modernization, technological innovation, and transport decarbonization.

New Zero-Tariff Import Quota Approved

The renewed measure authorizes duty-free imports of completely knocked down (CKD) and semi-knocked down (SKD) electric and hybrid vehicle kits valued at up to USD 463 million. These imported kits are intended for vehicle assembly within Brazil and will remain eligible under the quota for up to six months starting July 1, 2026. According to Gecex-Camex, the decision is aligned with national initiatives designed to strengthen industrial capabilities while supporting cleaner mobility technologies across the country's automotive sector.

Tariff Structure After Quota Exhaustion

Once the approved quota has been fully utilized, different tariff rates will apply depending on the type of imported vehicle kit. SKD imports will immediately become subject to a 35% import tariff. CKD imports, however, will continue under a reduced 14% tariff until January 1, 2027, when that rate will also increase to 35%. The latest decision does not alter the treatment of fully assembled imported electrified vehicles, which will continue to face a 35% import tariff beginning July 1, 2026.

Manufacturers Expected to Benefit

Local media reports indicate that the renewed import quota is expected to benefit manufacturers including BYD and General Motors, both of which have already initiated electric vehicle assembly operations in Brazil using imported CKD and SKD kits. By allowing continued access to duty-free imports within the approved quota, the policy may help these companies sustain production while expanding their local manufacturing activities.

Industry Response

The decision has drawn criticism from Anfavea, the Brazilian automakers association. The organization argues that extending the import incentive could weaken domestic manufacturing by reducing incentives for deeper local production investments. According to the association, changing the established policy framework may also introduce uncertainty for manufacturers that had structured their long-term investment plans based on the previously announced tariff schedule.

Import Tariff Timeline

The revised policy establishes different tariff treatment depending on vehicle kit type and import category.

Frequently Asked Questions

What is the Brazil Zero-Tariff EV Kits Quota?
The Brazil Zero-Tariff EV Kits Quota allows eligible imports of CKD and SKD electric and hybrid vehicle kits to enter Brazil without import duties within an approved quota limit. The measure supports domestic vehicle assembly by permitting manufacturers to import qualifying kits duty-free for a limited period while continuing the government's objectives of promoting industrial competitiveness, fleet renewal, innovation, and lower-emission transportation.

Which companies are expected to benefit from the renewed quota?
Local reports indicate that BYD and General Motors are among the manufacturers expected to benefit because both have established electric vehicle assembly operations in Brazil using imported vehicle kits. Continued access to duty-free imports under the renewed quota may help these companies maintain production while expanding local assembly activities until the allocated quota is exhausted.

Does the new policy change tariffs on fully assembled electric vehicles?
No. The renewed measure applies only to qualifying CKD and SKD electric and hybrid vehicle kits imported for local assembly. Fully assembled imported electrified vehicles remain outside the scope of the incentive and will continue to be subject to a 35% import tariff beginning July 1, 2026, in accordance with the existing tariff framework.