SAO PAULO – Chinese-Saudi carmaker Amsia Motors signed a preliminary deal on Thursday to build the first auto factory in the Brazilian state of Sergipe, where it plans to invest 1 billion reais ($457 million) on a plant focused on hybrid and electric vehicles.
Amsia, which is backed by the Saudi Eram group and works in partnership with German, British, Canadian and Chinese carmakers, would be the first manufacturer with a factory in Brazil dedicated to electric cars.
Though most of Brazil’s auto industry is focused in the country’s southeast region, the poorer northeast has recently attracted the attention of car manufacturers, following strong economic growth in the region.
Fiat SpA is building its second Brazilian factory in Pernambuco, while China’s JAC Motors is setting up a plant in Bahia, the same state where Ford Motor Co has a new plant.
The Saudi prince Faisal Al Saud, Amsia’s main investor, arrived in Brazil last weekend with Amsia Chief Executive Mustafa Ahmed to confirm the final details of their agreement with the Sergipe government.
Sergipe officials expect Amsia to build its first factory in Latin America in the next 14 months. Eventually, the plant will expand to produce buses and agricultural machinery in addition to cars. The company gave no indication of final capacity or sales forecasts.
Amsia announced the project despite a lack of legislation in Brazil specifically targeting production of hybrid and electric vehicles, whose high production costs have made it hard to attract investors.
Brazil is the world’s fourth largest car market and the seventh biggest car manufacturer. Carmakers association Anfavea expects that in 2013 the country will mark its seventh straight annual sales record, with close to 4 million vehicles sold.