Mexico, with its 14 free trade agreements covering around 50 countries, including regions in the Americas, Europe, and Japan in Asia, faces a challenging scenario with the elimination of tax benefits.
In addition to China, the most affected countries will be those in the Asian region that do not have a trade agreement with Mexico.
In the automotive sector, the eastern giant stands out as the main supplier to the Latin American country in this area, but it is not the only one.
Juan Jesús González, a specialist in innovation management for business development and sustainability, points out that “this decision also affects key countries such as South Korea, Vietnam, India, Thailand, Taiwan, and Turkey.”
The fact is that these countries have been crucial for the supply of electronic components and automotive parts in Mexico.
Now, with the removal of tax benefits, an increase in import costs is possible, which will inevitably impact consumers’ wallets.
“As tariffs are imposed or reinstated on these vehicles, the cost will have to reflect that increase,” reveals Leonardo Beltrán, a researcher at the Institute of the Americas and an expert in sustainability.
Starting in October, electric vehicles imported from countries without a trade agreement with Mexico will lose the tariff exemption, which ranged between 15% and 20% and has been in place since September 2020.
This measure, implemented during President Andrés Manuel López Obrador‘s administration, aimed to reduce import costs to encourage the acquisition of electric vehicles and advance the transition.
As a result, the prices of these cars dropped, with some models available for less than 400,000 pesos.
However, the impact of this news is not limited to the prices of electric vehicles. González warns that one of the main factors that has hindered the development of electromobility globally is the lack of infrastructure renewal, particularly regarding charging stations and the systems for generating, distributing, and storing electric energy.
“Even if there are subsidies and public policies to promote the purchase of electric vehicles, if the infrastructure does not adapt to the growing demand, the associated costs will skyrocket, which could discourage potential buyers,” González indicates.
A Realignment in the Trade Balance
Mexico’s trade balance highlights the country’s dependency on Asian imports, leaving no doubt that this change will have a significant impact on the automotive industry.
Since the implementation of the measure, electric vehicle sales in Mexico have increased from less than 0.5% to 1% of total sales, with an expanded offering of approximately 60 electric models, according to the Electro Mobility Association, A.C. (EMA).
Chinese brands such as JAC, BYD, SEV, and MG, along with manufacturers that produce some electric models in China, like Volvo, BMW, and Renault, have been the main beneficiaries of this exemption.
As some countries adopt more restrictive policies towards electric cars, Mexico faces the challenge of balancing the push for sustainable technologies with strengthening its trade relationship with the United States.
Here, Edgar Suárez, country manager of Zeekr in Mexico, asserts that his company will not yield to tariff pressure. ‘We will not sacrifice the quality of our products for geopolitical reasons. Even if we face a tariff, we will remain competitive in the Mexican market,’ he affirms with determination, reflecting the sentiment of many brands operating in the country.
The Future of Mexico’s Electromobility at Stake
In this way, it could be said that the eMobility industry is at a crucial juncture.
While some stakeholders advocate for the renewal of incentives, others believe it is time to seek more robust alternatives to ensure sustained sector growth.
One thing is certain: October 1 is a crucial date on the path towards a cleaner and more efficient future in Mexico.
What’s at stake is not only the accessibility of electric vehicles but also the country’s commitment to sustainable mobility in an increasingly competitive global landscape.
To learn more about electromobility in Latin America, visit Mobility Portal Latinoamérica.
