Mexico will soon build large numbers of electric vehicles, but most will head north to the United States instead of selling domestically.
The reason behind it is not cultural conflicts or lack of concern for the environment. It is a matter of economics and practice. According to a recent Reuters report (via car news).
Of the nearly 1.1 million new cars sold in Mexico last year, only 5,600 were electric, accounting for 0.5% of domestic auto sales for the year, according to the report. However, production of electric vehicles has increased to 142,000 vehicles this year, from 78,000 vehicles in 2022, the report said. That’s based on estimates from Mexican auto parts industry group INA published before Tesla announced the plant in Mexico.
BMW Group Plant San Luis Potosí in Mexico
Part of the problem is cost. A Mexican worker earns an average of $366 a month, while the statutory minimum wage is around $11 a day, according to the report citing official data. At current prices, electric cars are generally out of reach for most Mexicans. And the country has not made any financial incentives for electric vehicles.
Charging infrastructure is also the subject. The report cites data from the Mexican Automobile Industry Association (AMIA) showing that there are only 1,100 charging locations nationwide. Most of that is in the capital and other major cities, the report noted. The Evergo charging network plans to add 4,000 chargers over the next four years.
Mexico’s increase in EV production is mainly aimed at US President Biden said at the beginning of his term that the administration would emphasize Electric vehicles made by union, made in the United Statesbut clearly Mexico is an important part of the plan. Full EV Tax Credit Rules including raw material source details coming soon, but they are also expected to process material from Mexico like material from Montana, for example.
The 150,000th Ford Mustang Mach-E built
Therefore, it may not be a coincidence that several automakers have announced plans to produce EVs for Mexico recently. Tesla confirmed its factory for Mexico last month, and BMW announced that Neue Klasse EV by the middle of this decade will be produced in Mexico.
General Motors in 2021 announced 1 billion USD investment at the Ramos Arizpe, Mexico plant, where the Blazer EV and Equinox EV will be manufactured. That upset United Auto workers, who in a statement at the time of the announcement called the decision “a slap in the face” to union members and taxpayers.
Meanwhile the Ford Mustang Mach-E already manufactured in Mexico, and Ford has set a goal of increasing production to 200,000 units per year, destined for North America and Europe, by the end of the year.
