News Article

Electrification Advances, Challenges in the Supply Chain

By Andrea Villar | Wed, 03/24/2021 - 18:26

You can watch the video of this panel here.

OEMs have made electric vehicles a priority. Investments made 10 years ago are becoming a reality across Asian, European and North American brands. For these vehicles to further penetrate the Mexican market, not only charging infrastructure is very much needed but also the right government incentives to promote sustainable mobility, agreed panelists at Mexico Automotive Summit on Wednesday, Mar. 24.

“OEMs in Mexico have played a central role in the development of the public charging infrastructure. Ninety percent of the investment has come from them in the last five years,” said Rodrigo Centineo, Founding Partner at E-Drive, a Mexican company focused on the value chain of electric vehicle charging. In the government sector, Centineo said, the most representative effort has been CFE's program for the development of around 100 charging stations through tenders. 

Toyota has been one of the leading players in the electric revolution for the past years. In his participation, Luis Lozano, President of Toyota Motor Mexico, said that the company has a broad approach to electrification. “We do not plan to move from point A to point B without going through other stages. We know that every country, society and customer will have different needs. That is why we will keep our offer open between hybrid, electric, fuel cell or hydrogen,” he said. Following a similar approach, Elias Massri, CEO of Giant Motors, shared that the company has been developing and marketing electric last-mile vehicles for more than five years. “We can already know how many kilometers a truck travels per day, its exact charging times and how long its battery lasts. This gives huge advantages in terms of cost control regarding wear and tear on components,” he said. The company currently has more than 1,500 vehicles circulating in Mexico under this concept. 

In the public sector, said Ernesto Sánchez, Minister of Economic Development of Jalisco, states follow a different energy path. In Jalisco, for example, there is a state energy plan as part of the five economic development strategies of this administration. It features two areas of support for electric mobility and charging infrastructure:

  1. Financing through state development banks for projects related to electric mobility and renewable energies

  2. Direct, non-repayable grants for projects related to sustainable initiatives for SMEs

As the fourth largest vehicle exporter in the world and the sixth-largest vehicle producer, Mexico will eventually adapt its manufacturing lines to electric and hybrid vehicles, said Luis Lozano. However, this transformation will bring great challenges and demands, not only for businesses but also for governments and academic institutions. 

Comprehensive public policies, said Lozano, play a key role in this transformation. “Laws are needed to make it easier for global companies to establish electric vehicle production in Mexico. Actions are needed, not just words,” he noted. “After all, industrial plants cannot be fueled by dirty energy to build clean vehicles.” Mexico, Lozano added, is not competing against Brazil or Asia as most people think, but with the south of the US. “Public policies generate certainty so that investments are made in Mexico and not elsewhere.” 

“In Mexico, efforts will always be insufficient if they are isolated. There must be joint efforts between companies, society and government. The road to electrification is rough and challenging but we are advancing by leaps and bounds, globally,” said Edgar Estrada, Managing Director of Volkswagen Brand Mexico. Opportunities abound, according to Centineo. Mexico has been a pioneer in including the charger and its installation in the sale of electric vehicles, which has generated positive feedback from users. “There are also good practices globally that Mexico could take advantage of, such as standardizing charging protocols to make the infrastructure accessible to the majority of people,” he pointed out.

Massri added that there is great room for improvement in the country to end the myths and concerns surrounding electric vehicles, with education being the main driver to start a change in mindset. One of the biggest fears when acquiring one of these vehicles, he explained, is that spare parts will not be available due to limited production. “JAC's electric cars mirror our internal combustion models, however. When there is an accident, any one of our 40 dealers has the spare part our customer needs.” 

Another concern, Centineo added, is the fear of running out of charge in the middle of the road. This could be addressed by adding software to the charging centers so that all users have more control, he said. “The owner of the charger can control and charge for its use, while operators like us can provide more optimal maintenance to the charging network.” 

To close the panel, Nazareth Black, CEO of Zacua and moderator of the panel, added that the company she leads has addressed users’ concerns by offering fully customized service, with a charging center installed at their home, maintenance and financing included. She also said that digital platforms have been a useful promotional tool for this type of vehicle among younger generations. 

Andrea Villar Andrea Villar Journalist and Industry Analyst