BYD and Geely Are Racing to Buy the Shuttered Nissan-Mercedes Factory in Aguascalientes

A $1 billion Nissan-Mercedes factory in Aguascalientes just went dark, and BYD and Geely are racing to buy it before USMCA renegotiation closes the door on Chinese manufacturing in North America.

Landlord Ledger Publications • News • 2026-05-29

On May 16, 2026, twelve days ago, a Mercedes-Benz GLB rolled off the line at the Cooperation Manufacturing Plant Aguascalientes and the lights went out on a $1 billion facility that had operated for less than a decade. The plant, known as COMPAS, was a joint venture between Nissan and Mercedes-Benz that opened in 2017 as a showcase of global manufacturing cooperation. It is now a prize asset sitting on 110 hectares in the heart of Mexico's auto-manufacturing corridor, fully equipped, workforce-ready, and available to whoever moves fastest. According to a Reuters exclusive from February, the three finalists to acquire it are BYD, Geely, and Vietnam's VinFast. The USMCA review formally began May 25, three days ago, and Washington's scrutiny of Chinese manufacturing roots in Mexico has never been more intense.

Why the Factory Closed

The COMPAS story is not a story about failure. It is a story about realignment.

Mercedes-Benz built the GLB in Aguascalientes because in 2017, labor costs in Mexico were among the lowest in North America and proximity to the U.S. market made logistics straightforward. By 2025, the calculus had shifted. Mercedes relocated GLB production to Hungary, where U.S. tariff rates on European-made vehicles are lower than the 25% levy Trump applied to Mexican-made cars. The model rationale that justified the plant had been eroded by tariff geography.

Nissan's exit is about something larger. The Japanese automaker posted a $4.5 billion net loss for the fiscal year ending March 2025, one of the worst results in its history. The company announced a sweeping restructuring plan called Re:Nissan that would cut its global plant count from 17 to 10 by fiscal year 2027. COMPAS produced the Infiniti QX50 and QX55, models that had been losing sales for years. Nissan stopped Infiniti production at the plant in November 2025 and the Mercedes line ran until May 16. At peak operations, the facility employed approximately 3,600 workers and held annual capacity exceeding 230,000 vehicles. It was designed on a joint investment of exactly $1 billion.

The closure left something rare: a large-format, fully built, institutionally designed automotive plant in a proven manufacturing location. Not a distressed asset, but a stranded one.

Why BYD and Geely Want It

For the two largest Chinese automakers, the COMPAS facility solves a problem that years of planning could not.

BYD announced plans to build a greenfield factory in Mexico in 2023, targeting 150,000 vehicles per year and 10,000 direct jobs. By February 2024, the company was identifying specific sites. By mid-2024, it was reported to be closing in on a deal for a plant that could eventually produce up to 500,000 vehicles annually. Then the plan collapsed from two directions at once.

China's Ministry of Commerce declined to approve the investment. According to the Financial Times, Beijing's core concern was geography: a factory in Mexico, a country with deep trade integration with the United States, was seen as a potential vector for BYD's proprietary smart car technology to leak to American competitors. Chinese automakers require government approval for overseas factory investments. Stella Li, BYD's executive vice president, confirmed in July 2025 that the company had suspended its Mexico factory plans. "Geopolitical issues have a big impact on the automotive industry," she told Bloomberg. "We want to wait for more clarity before making our decision."

The COMPAS acquisition sidesteps the greenfield problem almost entirely. A purchase of existing private industrial property does not require Mexican government approval. Beijing's Commerce Ministry has reportedly not objected to the acquisition bid. A factory that took years of regulatory friction to block can be bought in months.

The numbers make clear why the asset is attractive. BYD's global vehicle sales have grown tenfold since 2020. The company surpassed Tesla in full-year all-electric sales in 2025, selling over 2.25 million BEVs to Tesla's 1.63 million. Geely, which owns Volvo, Polestar, Lotus, and Zeekr, also sold more than 4 million vehicles in 2025. Both companies need production infrastructure in the Western Hemisphere, and COMPAS delivers 230,000 units of capacity, a skilled workforce, and existing logistics infrastructure with no permitting queue.

Geely's interest in the COMPAS plant fits inside a broader Latin American strategy it has been assembling with notable speed. In November 2025, the company completed acquisition of a 26.4% stake in Renault do Brasil, gaining access to the Ayrton Senna plant in Sao Jose dos Pinhais, Parana. That arrangement gives Geely a manufacturing and distribution foothold in Brazil, Latin America's largest auto market. A COMPAS acquisition would extend that arc north into Mexico, positioning Geely across both of the region's major manufacturing corridors.

The 3,600-Job Political Lock

Mexico's federal government cannot legally block a private industrial property sale. That is not a technicality; it is the structural fact that makes this deal uniquely difficult for Washington to stop through diplomatic pressure on Mexico City.

What Mexico's government can do is signal reluctance. The economy ministry had quietly urged state authorities to delay Chinese automaker investments while it concluded trade negotiations with the United States. But that posture was built around new greenfield projects, which require permits, environmental approvals, and state cooperation at every stage. The COMPAS transaction requires none of that.

The more powerful constraint on Mexican government resistance is economic. Mexico lost approximately 328,000 auto-industry jobs in the first half of 2025 alone, a 6.5% contraction driven by the 25% tariff Trump imposed on Mexican-made cars. Nissan separately closed its historic CIVAC plant in Cuernavaca, which had been Mexico's first Nissan factory outside Japan and had operated since 1966. Vehicle exports to the United States fell nearly 3% in 2025, with industry association AMIA expecting a steeper decline in 2026 if tariffs hold.

COMPAS's 3,600 jobs are not an abstract figure in this context. They are a direct political instrument. A Chinese buyer would almost certainly restore all of them. For the government of President Claudia Sheinbaum, blocking a sale that restores 3,600 industrial jobs while Mexico's auto sector bleeds, and doing so in deference to pressure from a U.S. president who has explicitly said "we don't need cars made in Mexico," is not a tenable political position. The leverage runs in the wrong direction.

The USMCA Race Against Time

The USMCA review formally began May 25, three days ago. Under Article 34.7 of the agreement, the United States, Mexico, and Canada must jointly decide by July 1, 2026 whether to extend the treaty for another 16 years. What happens on that date will determine whether the tariff-free access governing $1.8 trillion in annual North American trade continues, gets renegotiated with tighter rules of origin, or begins a ten-year sunset countdown ending with the agreement's expiration in 2036.

For Chinese automakers, the current USMCA rules represent a narrow and closing window. Vehicles assembled in Mexico can enter the United States duty-free if they meet the 75% North American content threshold. A Chinese buyer of COMPAS would immediately inherit the plant's manufacturing infrastructure but would need years of supplier development to achieve USMCA compliance. That process is far faster with an existing plant than a greenfield site.

USTR Ambassador Greer has explicitly identified rules-of-origin enforcement and Chinese content restrictions as top priorities in the review. Congressional testimony earlier this year included direct language about preventing subsidized Chinese autos from accessing the U.S. market through Mexico. The White House has framed the review as a direct response to Chinese goods entering the U.S. via Mexican assembly operations. The pressure to tighten origin thresholds before any Chinese automaker can establish qualifying production in Mexico is real and growing.

That urgency is exactly why the COMPAS bidders are moving now. Each month of delay is a month closer to potential treaty changes that could make Mexican assembly by Chinese companies economically unworkable for the U.S. market. The acquisition is a race to plant a flag before the rules are rewritten.

What the Asset Class Should Take From This

The COMPAS transaction is not a standard industrial real estate deal, but it carries lessons for the asset class.

The facility represents a category that will become more common as the global auto industry realigns under tariff pressure: stranded infrastructure in prime locations. These are not failed plants. COMPAS was operationally sound and fully depreciated against its $1 billion construction cost. It is a plant whose strategic rationale was destroyed by policy change faster than its physical useful life expired. For industrial property investors, that pattern creates acquisition opportunities that resemble distressed assets but behave like value-add plays, since the underlying real estate and equipment quality remain high.

The COMPAS plant is also a reminder that industrial property in Mexico's auto corridor is not priced on a single risk dimension. The job losses of 2025 concentrated in exactly the facilities that most directly served the U.S. market. Plants optimized for Latin American domestic demand, or positioned to serve third markets through Mexico's 50-plus free trade agreements, were largely unaffected. Geographic and end-market diversification within the Mexican industrial property universe now carries a premium it did not three years ago.

For the buyer who wins COMPAS, the immediate question is what to manufacture. BYD's most likely scenario involves a vehicle line aimed at the Latin American market: Mexico's 1.6 million annual car sales plus exports to Colombia, Chile, and Brazil, where BYD already sells. Chinese brands captured close to 15% of Mexico's new car market in 2025, up from essentially zero in 2020. Local production would allow BYD or Geely to bypass the 50% import tariff Mexico now imposes on Chinese-made vehicles, delivering a landed cost advantage that would be difficult for any import-only competitor to match.

The U.S. market remains a longer-term question. Getting to 75% North American content from a standing start in Aguascalientes would require years of supplier localization. But starting that clock now, before a revised USMCA potentially closes the door, is worth the investment regardless of near-term outcome.

The Building's Last Car

The last vehicle built at COMPAS was a Mercedes-Benz GLB. It came off the line twelve days ago. The plant has been quiet since.

The facility on those 110 hectares outside Aguascalientes is not in decay. It is in transition. The workforce trained on it remains in the local labor market. The logistics infrastructure built over nine years of operation remains intact. What the plant lacks is a customer for its output and an owner willing to bet on where the next chapter of North American auto manufacturing will be written. BYD and Geely are both betting it will be written in Chinese. The USMCA clock says they have until July 1 to make that argument compelling.