Just south of California, a wave of cheap, high-tech Chinese cars is inching toward the US, and a legal loophole is already letting some through.

In Mexico’s border cities, dealerships are packed with sleek electric vehicles, hybrids and gas-powered SUVs priced far below anything on American lots.

Some start around $20,000, a price point that no new car in the US currently hits.

Washington has worked to keep them out, slapping heavy tariffs on Chinese imports and enforcing strict safety rules.

Mexican residents, including those who live in Mexico but work in the US, can legally drive their vehicles across the border, even if those cars don’t meet American standards.

That means Chinese EVs have already been showing up in California.

A BYD dealership in Tijuana’s Zona Río confirmed to The California Post that vehicles are being purchased and driven into San Diego, noting buyers must have Mexican residency or a Mexican driver’s license.

The draw is obvious: more car for less money.

Inside, the China-made vehicle offers advanced tech, bilingual labeling and even a built-in karaoke app, features that stand out as US car prices climb toward an average of $50,000 and gas prices have some considering alternatives.

That gap is especially glaring in California, where EV adoption is high and companies like Tesla and Rivian dominate, but at significantly higher price points.

Industry leaders admit the threat is real.

“I’m telling you, it is very difficult—not to say impossible—to compete,” Hyundai Motor CEO José Muñoz told the Wall Street Journal. “We cannot compete at the same price as the Chinese in the market where we operate. Otherwise, we will be losing money.”

BYD overtook Tesla in 2025 to become the world’s top EV seller and now controls about 70% of Mexico’s EV and plug-in hybrid market.