Electric mobility is expanding in Mexico, and production and sales will boom this year.
Electric vehicle production in the country alone is expected to increase 179% by the end of the year, while sales could more than double with the arrival of new Chinese brands.
According to an analysis by the Business Intelligence Area of Directorio Automotriz, around 221,970 electric vehicles will be produced in Mexico by the end of 2023, an increase of 179% compared to 2022.
Models such as the Ford Mustang Mach-E, Chevrolet Blazer EV, Chevrolet Equinox EV, and JAC E 10X are the most produced in assemblers installed in the country.
Last year, electric vehicles accounted for 2.4% of the total number of light vehicles assembled in the country, but this year, this share may exceed 6%.
Meanwhile, the commercialization of 100% electric cars aims to increase growth to triple digits since, as of April, several Chinese brands have started selling eco-friendly vehicles in Mexican territory, such as BYD, which plans to sell around 5,000 electric cars in 2023 and ARRA another 2,000, without counting the rest of the brands.
“The numerous investments that OEMs and Tier 1 suppliers have made in Mexico this year confirm that the nearshoring trend and the agreement between Mexico, the United States, and Canada (T-MEC) are creating a new scenario with new opportunities for the automotive sector,” the analysis said.
From 2020 to 2022, the automotive industry in Mexico produced more than 157,730 electric cars, of which 79,471 units were assembled in 2022, with the model that best exploited the market is the Ford Mustang Mach-E with 77,897 units, followed by the JAC E 10X with 911 units produced by JAC Mexico (Giant Motors Latin America).
However, other brands have also decided to change the production of their vehicles and have found a strong ally in Mexico.
BMW announced on Feb. 3, 2023, that it would produce electric vehicles at its plant in San Luis Potosí, and the General Motors complex in Ramos Arizpe will begin production of the Chevrolet Blazer EV, initially for export only, starting in the last quarter of 2023 it will be launched in the Mexican market.
JAC Mexico also plans to increase its production by 25% this year. In contrast, Ford will increase production of the Mustang Mach-E in response to Tesla’s arrival in Mexico and competition with it in the US market.
Suppliers to both companies have already invested more than US$3.5 billion in the country, according to the B2B Automotive Platform.
Currently, the northeast of the country accounts for 41% of electric mobility suppliers, with another 40% in the Bajío region, with Guanajuato being the leading entity in this region.
According to the Mexican Automotive Industry Association (AMIA), sales of 100% electric cars in Mexico will increase by 394% by the end of 2022, when the industry sold 5,631 units, compared to 1,140 cars in 2021.
For Latin America, Mexico is forecast to lead in electric car sales, followed by Brazil, as part of its commitment to reduce pollutant emissions.
However, the industry faces major challenges in the mass production of this type of vehicle, which public policies should support.
EXPORTS ON THE RISE
Last year, Mexico exported US$2.636 billion worth of electric vehicles to the US market, ranking fourth among the countries with the highest electric vehicle sales in the United States.
Among the largest exporters of electric vehicles to the US market in 2022, Japan topped the list with US$6.381 billion, followed by South Korea (US$5.874 billion), Germany (US$5.070 billion), Mexico (US$2.636 billion) and Canada (US$2.195 billion).
Mexico’s advantages include the following:
- proximity to the United States,
- production of vehicles that, like those in Canada, are eligible for the federal tax credit (under the Inflation Reduction Act of 2022),
- a network of trade agreements (T-MEC),
- skilled and relatively cheap labor, productive integration with North America, and natural resources, including minerals.
According to the International Energy Agency (IEA), automakers will sell 6.6 million plug-in electric cars globally in 2021, more than double the three million sold in 2020 and more than triple the 2.2 million sold in 2019.
The broader definition of electric cars, including plug-in hybrids, accounts for about 9% of the global new car market, up from four percent in 2020 to two percent in 2019, according to the IEA.
ANNOUNCEMENTS OF RECENT INVESTMENTS IN ELECTRIC MOBILITY IN MEXICO
Ford: became the first automaker to announce investment in electromobility in 2019, spending US$1.1 billion to adapt its plant in Cuautitlán, Mexico, where the Mustang Mach-E electric SUV will be built starting in 2020.
GM: announced a US$1 billion investment in 2021 to adapt its plant in Ramos Arizpe, Coahuila, to produce electric SUVs.
VW: announced a $763 million investment at its Puebla plant in October 2022 to begin adapting for electric SUV assembly.
BMW: announced an investment of more than $860 million in February 2023 to expand its San Luis Potosí plant, which will produce electric batteries and cars.
Stellantis: announced in February 2023 an initial investment of $200 million in its plant in Saltillo, Coahuila, where it plans to produce its first electric vehicle in Mexico, the RAM Promaster.
Tesla: confirmed in March 2023 the construction of an assembly plant in Santa Catarina Nuevo Leon, where it will manufacture a new next-generation electric vehicle; the government indicates that US$5 billion will be invested.
Jetour: in March 2023, the Chinese company announced its intention to invest US$3 billion in constructing an assembly plant for combustion and electric vehicles in the Bajío region.
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