“Having the United States (U.S.) adopting regulation is something that provides certainty for Mexican manufacturers regarding the demand’s security,” says Ricardo GarcÃa Coyne, Program Manager at CALSTART.
Furthermore, he believes it’s “an opportunity to align objectives and regulations with those of other countries.”
Currently, Mexico is among the top five countries in automotive exports worldwide.
In fact, its primary destination market is the U.S., accounting for 89 per cent of total shipments.
19.1 per cent of sales in the U.S. market are vehicles made in Mexico.
This tension between both economic powers is causing a revolution in the automotive industry of the Latin American country.
The truth is that the United States wants to stop buying from China, making its neighbor increasingly important to be considered a strategic ally in the eMobility transition.
Here, GarcÃa Coyne suggests that if Mexico doesn’t start producing on a large scale, the emerging demand “will be met by other markets.”
Thus, the production of electric vehicles will end up being supplied by the Asian giant or countries like Brazil.
Hence, the expert in sustainable mobility sees the current situation as a fundamental opportunity to seize.
“I believe there is consensus among government, industry, and fleets. It’s a fact that we will transition to zero-emission vehicles,” reveals the specialist.
” What still raises doubts is how the new industry composition will be in this new reality and how quickly different countries will move,” he adds.
What did the pressure from the United States entail in the new Mexican disposition
Mexico will keep China at bay by refusing to offer incentives such as low-cost public lands or tax cuts for investment in electric vehicle production.
But what does this measure mean?
Undoubtedly, Chinese automakers are increasingly stepping on the accelerator with the aim of leading the electromobility market.
The Chinese electric vehicle giant BYD increased its sales by 62 per cent in 2023.
Even during the last quarter of 2023, it surpassed Tesla with 526,400 compared to 484,500 electric cars sold.
China’s presence in the European eMobility market is noticeable; in fact, in February of this year, one in every five electric cars registered in Europe was manufactured in the eastern territory.
As a result, companies are gearing up to set up plants across the Old Continent.
The landscape is replicated in Latin America, where the Chinese see an opportunity to take the leap and establish their own production.
In this context, Mexico plays a key role, not only being considered a strategic market in terms of sales but also in production due to its skilled workforce.
Another important factor to consider here is its geographical position and free trade agreements, which could make it the gateway to U.S. soil.
Around 20 Chinese manufacturers sell cars in Mexico, but none have a plant in the country yet.
However, this is about to change as brands like BYD, Chery Group, and Great Wall Motors are on Mexican soil defining locations for the installation of their factories.
Meanwhile, JAC will expand its production plant in Hidalgo with the purpose of operating seven assembly lines, thus anticipating demand with the presence of electric cars and trucks.
However, the new measure determined by the Mexican Government under pressure from the United States puts a spanner in the works for China’s deployment plan in its foray into the American automotive market.
Now, it remains to be seen if Mexico will continue to leverage the move to strengthen its role in the global sustainable mobility market.
To learn more about electromobility in Mexico, visit Mobility Portal Latinoamérica
