BMW, Nissan Scale Up Mexican Operations for Electromobility

BMW and Nissan are ramping up their operations in Mexico to better meet the changing demands of the market towards electromobility. BMW is poised to kick off electric vehicle (EV) production with a new battery manufacturing facility adjacent to its San Luis Potosi assembly plant, while Nissan is enhancing its supply chain capabilities to adapt to fluctuations in consumer demand.

Mexico, the world’s fifth-largest vehicle exporter and fourth-largest exporter of automotive parts, serves as a strategic hub for original equipment manufacturers (OEMs) looking to establish robust supply chain networks. BMW and Nissan are spearheading this movement, as emphasized at the Finished Vehicle Logistics North America 2024 conference.

BMW is in the process of building an 80,000 m2 battery manufacturing facility next to its San Luis Potosi assembly plant, where it will commence production of the Neue Klasse electric sports activity vehicle in 2027. This endeavor, backed by an investment of approximately MX$15.8 billion (US$864.1 million), will create job opportunities for over 500 qualified individuals. Raúl Gamboa, head of Logistics, Production Control, and Production Systems, BMW Group Plant San Luis Potosi, noted that the facility has recently undergone significant structural updates to support electrification requirements.

“We have redefined the structure of some of our operations to cope with electrification requirements,” stated Gamboa. BMW is also integrating digital tools to enhance transparency and vehicle distribution management. This includes leveraging data analytics, fostering extended commercial relationships, redesigning layouts to enhance efficiency, and implementing new transportation concepts to address evolving demands. Additionally, BMW has initiated artificial intelligence projects aimed at predicting potential supply chain disruptions.

Electrification presents notable challenges, particularly in ensuring battery quality during transportation and establishing efficient charging infrastructure. Gamboa highlighted concerns such as range anxiety and the impact of Mexico’s climate on battery degradation. “We need to manage temperature and adhere to new safety regulations for hazardous materials,” he remarked. BMW benefits from the exchange of best practices across its global network, notably from its new plant in Hungary.

Similarly, Nissan is adapting its Mexican network to navigate fluctuating consumer demands. Steve Jernigan, Senior Director of Supply Chain Management, Nissan North America, identified labor shortages, particularly in skilled drivers, as a major obstacle. Recovery delays post-COVID have also resulted in shortages of equipment in rail and haulaway services.

“Approximately 35-40% of our production in Mexico is destined for the United States, and high interest rates and vehicle costs have prompted a shift towards sedans and small crossovers,” noted Jernigan. Nissan has made investments across intermodal Finished Vehicle Logistics (FVL) in North America to ensure delivery despite disruptions. “We have transitioned from relying on 80% rail to dedicated vessels, managed on a monthly basis, and have even employed haulaway trucks to transport vehicles from Mexico to the United States,” Jernigan elucidated.